David Jesse

Detroit Free Press

Gail Menesko thought it was a wise investment. Take out a few thousand dollars in student loans, get a degree in cosmetology, land a job and be on her way to having a "nice life."

Then she got divorced and had to feed her two kids and school didn't seem like a top priority anymore for the 26-year-old Detroiter. She dropped out and the bills started coming for her student loan. She hasn't made a payment in nearly a year, placing her in default.

"I want to pay, but other things are a priority now," she said.

She's hardly alone in not paying her loan.

The challenges ahead for the new DPS

Twenty percent of all federal loan borrowers have defaulted on their loans, according to new data released by the federal government last week. That translates into $121 billion of loans in default. That same data show 40% of all borrowers are not making any payments, and are in some sort of forbearance, delinquency or default.

Default — the worst category — occurs when a borrower hasn't made a payment in more than 270 days.

"This is a slow-moving disaster," Jason Delisle, director of the Federal Education Budget Project at New America, told the Free Press. "Why no hearings on Capitol Hill? Why isn't the administration talking about it more?"

The federal Department of Education put out a news release with the data, but used it to trumpet the number of people enrolling in income-based repayment plans. Those plans tie borrowers' monthly payment to how much money they make.

As of December 2015, nearly 4.6 million borrowers were enrolled in income-based repayment plans, a 48% increase from December 2014 and a 140% increase from December 2013, the department said in its release.

"Today's analysis suggests that the administration's efforts to help struggling borrowers are having a positive impact," said U.S. Secretary of Education John B. King Jr. in that news release. "While we see promising signs of progress, we know we have work to do to ensure that every borrower in distress has a clear path to avoid default. And I will continue to fight to ensure that students have access to an affordable education that helps them get ahead, rather than drowning in debt."

But Delisle said even that increase can be deceptive.

"Basically, many more people realized their income wasn't high enough to support their loans," he said.

Michigan's graduates had a default rate of 12.8% in 2015, the latest state-by-state breakdown shows.

A 2015 report from the nonprofit Project on Student Debt at the Institute for College Access & Success shows the average 2014 graduate of a Michigan college had $29,450 to pay back on federal student loans. Compare that to the debt of their peers of a decade ago, who left owing $18,754.

Detroit parents, students hope for better

Contact David Jesse: 313-222-8851 or djesse@freepress.com. Follow him on Twitter @reporterdavidj.