Student loan defaults set a record in the 2013 first quarter, reports credit rater Equifax, with $3.5 billion government and private loans souring. According to the U.S. Department of Education, there now are 6.8 million federal student loans in default at a time; and the staggering volume is overwhelming the department's systems for collecting on bad debt. Some $1.1 billion in defaulted student loans were stalled in the computer process in December, based on finding from DOE's Office of Inspector General. "The Department is not pursuing collection remedies and borrowers are unable to take steps to remove their loans from default status" as a result, according to the report. DOE spokesman Chris Greene said that problems with the computer system will be resolved soon, allowing affected loans to be transferred from servicing companies to private collection firms -- which then can garnish borrower wages and take other steps to move the accounts out of default status.