One in seven borrowers defaulted on their federal student loans, according to figures released Monday by the U.S. Department of Education.
The default rate—representing the first three years borrowers are required to shell out payments—rose from 13.4 percent to 14.7 percent. Defaults are now at the highest level since 1995, a sheer sign recent graduates face a financial future both crippling and dim.
The percentage of borrowers who defaulted on their federal student loans within two years of starting repayment also increased for the sixth year in a row, climbing to 10 percent, up from 9.1 percent the year prior.
"The growing number of students who have defaulted on their federal student loans is troubling," said U.S. Secretary of Education Arne Duncan in a statement. "The Department will work with institutions and borrowers to ensure that student debt is affordable."
For-profit colleges laid claim to the highest default rates than any other sector, with two-and three-year default rates ringing in at 13.6 and 21.8 percent, respectively. Public institutions followed in their wake, with similarly, steadily rising rates.
The report reflected the habits of borrowers whose first repayments were due in the 2011 fiscal year, yet defaulted before September 30, 2012. Of those given a three-year window, roughly 600,000 defaulted, having not made a required payment for at least 270 consecutive days.
The disheartening news comes mere months after the outstanding federal loan debt surpassed $1 trillion for the first time, bringing the total amount of all student loan debt, private loans included, to $1.2 trillion.
President Barack Obama addressed the issue in August after unveiling a new system for rating colleges, which he wants implemented before the start of the 2015 academic year. Schools will be evaluated on a variety of measures, including loan default rates. With the rating system established, Congress will start awarding federal financial aid based on performance.
The for-profit colleges unable to reduce today's record-breaking rates could miss out on money under Obama's proposed plans. Schools that aren't producing the desired results will no longer be subsidized.
In a previous interview with MSNBC, Duncan noted:
We have so many universities trying to do the right thing. We have states starting to invest more. We want to incentivize the good actors and say to those that aren't serious about containing costs, "You have to change your behavior."
And these sky-high default rates are far from exemplary.
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