Posted Date:May 20, 2015
|Author:||Matt Sessa, Deputy Chief Operating Officer, Federal Student Aid|
Subject: Federal Student Aid Posts Updated Reports to FSA Data Center
Today, Federal Student Aid posted a series of updates to its FSA Data Center, the centralized online source for Federal Student Aid data. All reports reflect activity through or as of March 31, 2015.
Below is a summary of the updated quarterly reports available on the FSA Data Center.
The Federal Student Aid portfolio reports include outstanding balances and recipients by loan program, loan type, loan status, repayment plan, and delinquency status.
The Free Application for Federal Student Aid (FAFSA®) Reports include application submissions by the applicant’s legal state of residence and by the schools listed on the applicant’s form.
The loan volume reports include Direct Subsidized Loan, Direct Unsubsidized Loan, PLUS Loan (for parents), and PLUS Loan (for graduate and professional students) originations, disbursements, and recipients by school.
The grant volume reports include Federal Pell Grant, TEACH Grant, and Iraq and Afghanistan Service Grant disbursements and recipients by school.
Key Findings in the Quarterly Reports
Federal Student Aid proactively posts these reports in support of open government initiatives to help ensure consistency, increase transparency, and establish self-service opportunities for customers. While not exhaustive, the information below provides a snapshot of key findings in our most recent reporting.
Shifts in the Outstanding Loan Portfolio
Since the implementation of the Health Care and Education Reconciliation Act of 2010, which eliminated new Federal Family Education Loan (FFEL) Program loans after June 30, 2010, the make-up of the outstanding loan portfolio has shifted. Today, the outstanding FFEL portfolio represents only 32.3 percent of the outstanding loan portfolio while the Direct Loan (DL) portfolio has grown to represent more than two-thirds of the outstanding loan portfolio. Perkins Loans make up the remaining 0.7 percent of the Federal Student Aid portfolio.
Increased Enrollment in Income-Driven Repayment Plans
Enrollment in income-driven repayment (IDR) options such as Pay As You Earn (PAYE), Income-Based Repayment (IBR), and Income-Contingent Repayment continues to increase. As of March 31, 2015, nearly 3.5 million Direct Loan borrowers were enrolled in IDR plans, up from just 2.2 million in March 2014. More than 80 percent of borrowers enrolled in PAYE and IBR plans make reduced payments based on a partial financial hardship. (Note: The ICR plan does not offer reduced payments to borrowers based on a partial financial hardship.)
Borrowers enrolled in IDR plans are required to submit annual income documentation. If an IBR or PAYE borrower does not provide documentation of his annual income or if the borrower’s income increases to an amount that exceeds the threshold for partial financial hardship, his payment will revert to the permanent standard payment amount. In either case, the borrower will continue to be enrolled in the IDR plan unless he chooses to change repayment plans. If the borrower later submits his income documentation and qualifies for a partial financial hardship, the payment amount is adjusted accordingly.
Federal Student Aid does not currently collect the reason why a specific borrower’s payment reverts to the permanent standard payment amount, but is planning to record this data element in the future to provide more targeted insight into why borrowers’ payments revert to the permanent standard payment amount.
Between March 31, 2014 and March 31, 2015, outstanding balances of DL recipients enrolled in IDR plans went from comprising 21 percent of DL balances in Repayment, Deferment, and Forbearance to more than 31 percent.
Deferment and Forbearance Usage
While the percentage of outstanding loans in deferment increased since last quarter, the majority of deferments continue to be education-related deferments. Specifically, more than 83 percent of DL volume in deferment and 66 percent of FFEL volume in deferment are in education-related deferments.
The balance of Direct Loans in forbearance decreased slightly since last quarter and now represents less than 11 percent of DL volume. Although discretionary forbearances related to temporary hardships, such as financial difficulties, change in employment, or medical circumstances still represent the majority, FSA has observed an increase in administrative forbearance, a status that servicers sometimes use while borrower actions are pending. For example, a servicer may place a borrower in an administrative forbearance while the servicer waits to receive a borrower’s income verification for an income-driven plan. Administrative forbearances now represent more than 26 percent of DL volume in forbearance.
Delinquency in the DL Portfolio
Almost four out of five non-defaulted DL borrowers in active repayment are current (on time or less than 31 days delinquent) on their federal student loan payments. Thus, the active repayment 31+ delinquency rate for DL is 20.7 percent by recipient count and 15.6 percent by total dollar balance. In contrast, the ED-held FFEL portfolio (loans purchased through the Ensuring Continued Access to Student Loans Act [ECASLA]) has a 31+ delinquency rate of 22.3 percent by total dollar balance. Please note that active repayment includes all current and delinquent borrowers whose accounts are currently serviced by federal servicers. Borrowers with loans in grace, in-school, in deferment, in forbearance, or in bankruptcy or disability status are not expected to make payments and are not included in this calculation. When calculating a delinquency rate that does include deferment and forbearance in addition to active repayment, the 31+ delinquency rate for DL decreases to 14.4 percent by recipient count and 10.4 percent by total dollar balance while the ED-held FFEL 31+ delinquency rate decreases to 14.7 percent by total dollar balance.
Decreased Application Volume Resulting in Decreases in Aid Disbursements
In the first quarter of the 2015-2016 application cycle, approximately 8.7 million FAFSAs were submitted, a 1.6 percent decrease from the same time period last year. Similarly, 2014-2015 FAFSA submissions are down about three percent from the same time period last year. The 2014-2015 application cycle remains open until June 30, 2015.
In alignment with the recent decreases in application submissions, the 2014-2015 grant and loan volume disbursed, as of March 31, 2015, has generally decreased when compared to the same time period for award year 2013-2014, as of March 31, 2015. Direct Loan volume has decreased four percent while Pell Grant volume is down two percent and TEACH Grant volume is down nearly three percent. Iraq and Afghanistan Service Grant disbursements have increased by less than one percent in the same time period.
Disbursements have declined across all school sectors (public, private non-profit, and proprietary). Proprietary school volume has experienced the most significant decrease over the last five years. In award year 2009-2010, proprietary schools represented nearly one-fourth of the total loans and grants disbursed compared with just 18 percent for the 2013-2014 award year.
Key Items to Note While Reviewing These Reports
To accurately interpret the data, please note the following items:
In the portfolio reports, recipient counts are based at the loan level. For that reason, recipients may be counted multiple times across varying loan statuses. For example, a recipient with one loan in deferment and one loan in forbearance would be counted once in each category. A recipient with two loans in the same status would only be counted once in that category.
In the portfolio reports by servicer, the not-for-profit servicers (NFPs) should not be directly compared to the Title IV Additional Servicers (TIVAS) due to differences in their portfolio composition. The NFP portfolio is overwhelmingly made up of accounts received from the Direct Loan Servicing Center in 2011-2012. These loans were already in repayment and current at the time they were transferred. As a result, the loans are more much stable and mature than the TIVAS portfolios. The TIVAS have high volumes of new borrowers who are much more likely to go in and out of delinquency. The TIVAS also service FFEL Program loans purchased through ECASLA and loans of all statuses received from the Direct Loan Servicing Center. Although the NFPs started getting new borrowers in January 2015, most of those loans are still in an in-school status.
The Direct Loan Portfolio by Delinquency Report should not be directly compared with the quarterly performance metrics for federal student loan servicers. The Direct Loan Portfolio by Delinquency Report is based on the Direct Loan portfolio only while the servicer metrics include all ED-held loans the servicer is responsible for, including ED-held FFEL Program loans. It should also be noted that the report on the FSA Data Center defines current repayment as less than 31 days delinquent while the most recent contracts with the servicers define current repayment as five days or less delinquent.
In the loan and grant reports, the first tab of the spreadsheet shows the number of recipients and disbursements for the specified quarter while the second tab shows the cumulative, award year-to-date activity. The second tab of an award year’s fourth quarter report will show data for the full award year. Since the information is reported by specific loan type or grant program, a total unique grant or loan recipient count is not available by school.
Please note that since loan and grant reports are run a few days after the quarter’s end, initial runs often underreport activity as a result of reporting delays and activity that occurs for the award year after the date (for example, summer disbursements).
The FSA Data Center was launched in 2009 in an effort to increase government transparency by proactively posting information useful to businesses, institutions, the media, and individuals. In addition to the reports listed above, Federal Student Aid regularly posts strategic plans, copies of executed contracts, and school compliance reports, such as Clery Act reports and financial composite scores, on the FSA Data Center. Federal Student Aid is committed to continuing to expand the data sets available on the FSA Data Center in alignment with customer needs.