The term “strategic default” was added to the financial glossaryduring the housing crisis of 2007-08.

It meant homeowners made deliberate decisions not to keep makingmortgage payments because they believed foreclosure wouldultimately cost less than continued ownership of underwaterhomes.

Now, the trend is gaining ground among recent college graduates withstudent loans--but it is impactingcertain types of students and schools far more than others.

Nationally, about 14 percent of all federal student loans default within threeyears after students leave college.

A default generally is declared when a student fails to maketimely payments for 270 days, and the consequences are severeincluding wage garnishment, loss of Social Security benefits, andconfiscation of federal tax refunds. Click here to see a full list of default terms andconsequences.

What is driving default rates higher?

There are two factors, above all others.

The first is for-profit schools that sell largely onlinelearning and have seemingly infinite ability to attract federalstudent loans.

Students at the University of Phoenix have received almost $2billion of federal student loans, according to an analysis by TheWall Street Journal, far more than any other school in the nation,and those students are defaulting at a 19.0 percent rate.

Kaplan University students have received $711 million and aredefaulting at 20.4 percent. Devry University students have received$665 million and are defaulting at 18.5 percent, WSJ says.

The second influencer is relatively small private colleges thatcater to lower-income students and have low graduation rates.According to WSJ, six such schools in the U.S. have default ratesabove 30.0 percent, the cut-off point for continuing to qualify forfederal financial aid.

In both cases, default rates are highest among students who donot graduate, can’t find work, and don’t feel they receivededucation of value.

They may think they are victims of misguided policies thatpromoted heavy personal debt loads in return for low-valueeducations.

They also may believe the federal government will bail themout.

You can check the default and nonpayment rates of colleges inyour area or state with an interactive tool provided by The Wall Street Journal: It’s aneye-opener.

“Nonpayment” means students are not in default, even though theyhaven’t yet made a loan payment within three years of leavingschool.

Many nonpaying students are taking advantage of payment deferralprovisions in the law, such as Income-Based Repayments (IBRs) andpublic service work.

Strategic defaults in student loans, as in mortgages, will havelong-term negative consequences for the U.S. economy.

Until they are addressed by policymakers, it’s not a bad ideafor students with loans to do the following: 1) avoid defaults; but2) take advantage of any payment minimization or deferral options;and 3) hope for a taxpayer bailout.

As the $1.2 trillion federal student debt mountain keepsgrowing, the odds in favor of bailouts keep rising.