Defaults on student loans will cost taxpayers nearly $2 billion this year, and a major reason given by people who welsh on debt is that they are out of work, the Education Department said yesterday.

Many said they simply didn't like the education they got, the department said.

"Unemployed and without income" was cited more than any other reason, slightly ahead of "working, but insufficient funds," the department said in an 80-page booklet called "Reducing Student Loan Defaults: A Plan for Action."

Many defaulters are confused about the loan process and their repayment responsibilities, the booklet says. Its first recommendation is that colleges and trade schools counsel borrowers on their responsibilities to repay "even if they do not complete the program or believe they benefited from the program."

A student leaving school or dropping out, should be contacted immediately and the need for repaying the loan should be emphasized, the department said.

The second recommendation is working closely with lenders to reduce defaults, including notifying the lender when a student can't be located to allow banks to begin tracing.

One major reason for defaults, the department found, is the student's unhappiness with the education he is offered and reluctance to pay. The percentage is particularly high at proprietary schools -- such as trade schools.

Schools should strengthen their curriculum, improve the quality of faculties and update facilities, the report recommends.