On average, more than 3,000 borrowers default on their federal student loans every day.

The number of people who have defaulted on their federal student loans increased 17 percent from 2015 to 2016, according to a Consumer Federation of America analysis of U.S. Department of Education data.

"Despite a booming stock market and unemployment falling, student loan borrowers are struggling," said Rohit Chopra, a senior fellow at the Consumer Federation of America and a former student loan ombudsman at the Consumer Financial Protection Bureau.

Last year, 42.4 million Americans owed $1.3 trillion in federal student loans. More than 4.2 million borrowers were in default as of the end of 2016, up from 3.6 million in 2015. In all, 1.1 million more borrowers went into or re-entered default last year.

People who have defaulted on their student loans "are going to have a tougher time passing an employment verification check, saving for retirement or ever buying a home," Chopra said. Borrowers in default can also have their wages garnished and their tax funds seized.

The increasing student loan default rate may have more to do with whether students finish their degrees than the rising cost of higher education.

"We don't have a student loan problem, we have a college completion problem," said Mark Kantrowitz, vice president of strategy for college and scholarship search site Cappex.com. "Students who drop out of college are four times more likely to default on their loans."