Posted Date:June 20, 2018
|Author:||Federal Student Aid|
Subject: Federal Student Aid Posts New Reports to FSA Data Center
Today, Federal Student Aid released three new reports that segment federal student loan borrowers by two demographic levels, including age and location; age and debt size; and debt size and location. The new reports were posted to the FSA Data Center along with a series of updates to the quarterly application, disbursement, and portfolio reports to include data through March 31, 2018. 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 stakeholders.
Key Findings in New Reports
Over the past year, FSA began publishing demographic information about its borrowers on the FSA Data Center through a series of reports. The new reports released today build upon previous releases to provide additional insight into federal student loan borrowers.
Characteristics of Federal Student Loan Borrowers
The new Portfolio by Age and Debt Size report illuminates the differences in debt size (including all federal undergraduate, graduate or Parent PLUS loans) by borrower age. For example, almost three in four borrowers (73 percent) ages 24 or younger owe less than $20k in federal student loans. This compares to 59 percent of borrowers ages 62 and older; 54 percent of borrowers ages 25-34 and ages 50-61; and almost half of borrowers ages 35-49. In contrast, almost nine percent of borrowers ages 50-61 owe more than $100K in federal student loans. This compares to eight percent of borrowers ages 35-49 and ages 62 and older; almost six percent of borrowers ages 25-34; and half of one percent of borrowers ages 24 or younger.
The new reports also provide greater insight into how the federal student loan portfolio is distributed across the United States by focusing on the borrower’s location (i.e. state of residence). When considering borrower location along with debt size, 72 percent of Puerto Rico borrowers owe less than $20K in federal student loans, followed by Wyoming and Nevada at about 59 percent. In D.C., less than 45 percent of borrowers owe less than $20K. In fact, almost 15 percent of D.C. borrowers owe more than $100K in federal student loans, the most of any location. About ten percent of borrowers in the ‘Other’ category (outside of the U.S. and PR) owe more than $100K in federal student loans, followed by Maryland (nine percent) and Georgia (eight percent). In contrast, less than four percent of borrowers in North Dakota owe more than $100K.
When considering borrower location along with the borrower’s age, D.C. borrowers have the highest average debt for borrowers, ages 24 or younger ($19.5K), ages 25-34 ($59.6K), and ages 35-49 ($59.4K). Borrowers ages 50-61 in Maryland have the highest average debt size ($47.8K) while borrowers age 62 and older living in Vermont have the highest average debt ($50K). Borrowers living in Puerto Rico consistently have one of the lowest average debt sizes across all age groups, ranging from $8.6K for the youngest borrowers and up to $28.4K for those ages 35-49.
Key Findings in the Quarterly Reports
While not exhaustive, the information below provides a snapshot of key findings in our most recent reporting. Student loans are highly cyclical in nature so figures should be compared year over year whenever possible.
Outstanding Loan Portfolio Overview
Today, the outstanding federal student loan portfolio is $1.41 trillion. The Direct Loan (DL) portfolio now represents more than 78 percent of the outstanding loan portfolio while the Federal Family Education Loan (FFEL) portfolio represents 21 percent, and Federal Perkins Loan Program loans comprise less than one percent. The federally managed portfolio, which includes DL and FFEL Program loans owned by the U.S. Department of Education, is now approximately $1.2 trillion, representing 85 percent of the total portfolio. The growth of the portfolio has slowed since 2010 as new disbursements have declined. Year-over-year, the total federal loan portfolio has increased just 5.7 percent—about $75 billion—with the FFEL portfolio decreasing by 7.8 percent and the DL portfolio increasing by ten percent.
Delinquency Rates Decrease
More than 85 percent of non-defaulted DL recipients with loans in active repayment are current on their loans (i.e. on time or less than 31 days delinquent), putting the 31-day-plus delinquency rate at 14.7 percent by recipient count and 11.6 percent by total dollar balance, as reported in the Direct Loan by Delinquency Status report. This represents an all-time low in delinquency rates since FSA began reporting this metric on the FSA Data Center in 2013. Although March typically represents a low point in delinquency rates for the year due to seasonality, the 2018 rates have significantly declined since last March when the delinquency rates were 17.8 by recipient count and 13.8 by total dollar balance. This represents a 17 percent decrease by recipient count and a 16 percent decrease by total dollar balance since last year.
The ED-held FFEL portfolio’s 31+ delinquency rate also experienced similar year-over-year decreases, now at 14.6 percent by recipient count and 16.8 percent by total dollar balance. When looking at the entire federally managed portfolio (combining Direct Loans and ED-held FFEL), the 31-day plus delinquency rates are 14.8 percent by recipient count and 11.9 percent by total dollar balance, down from 18.0 percent and 14.3 percent at the same time last year.
New Direct Loan Defaults Remain Steady
In an effort to more accurately measure the flow of defaults, Federal Student Aid began publishing data about new DL defaults in March 2016. Because there are currently no provisions to write off defaulted federal student loans, the cumulative defaulted loan portfolio continues to grow even as delinquencies and new defaults have slowed. During the most recent quarter (FY2018 Q2), about 273,000 borrowers, or 1.5 percent of recipients who were in repayment last quarter, entered default. The outstanding loan balances of new defaulters totaled approximately $6.1 billion or 1.0 percent of the total outstanding dollars that were in repayment last quarter. This is consistent with the percentage of recipients and dollars that went into default one year ago.
Increased Enrollment in Income-Driven Repayment Plans
Enrollment in income-driven repayment (IDR) plans such as Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE) has continued to increase. As of March 2018, 6.9 million DL borrowers were enrolled in IDR plans, an 11 percent increase from March 2017. Although almost 1.3 million ED-held FFEL borrowers are enrolled in IBR and Income-Sensitive Repayment (ISR), there is a large overlap of DL and ED-held FFEL IDR borrowers. Combined, 7.2 million unique borrowers are enrolled in IDR plans.
Tracking Toward Public Service Loan Forgiveness
The Public Service Loan Forgiveness (PSLF) Program, which was established under the College Cost Reduction and Access Act of 2007, permits DL borrowers who make 120 qualifying monthly payments under a qualifying repayment plan, while working full-time for a qualifying employer, to have the remainder of their balance forgiven. The Department introduced a voluntary Employment Certification Form (ECF) in January 2012 to help borrowers track their progress toward meeting PSLF requirements. As of March 31, 2018, approximately 874,000 borrowers have submitted at least one approved ECF. The overall ECF approval rate has been holding steady at about 66 percent.
October 2017 was the first month that borrowers could qualify for forgiveness under this program. Through March 31, 2018, approximately 16K borrowers have submitted applications for loan forgiveness under the PSLF program. FSA plans to include more detailed information about the outcome of these applications in a future release.
Application Volume Steady
The 2017-18 Free Application for Federal Student Aid (FAFSA®) form launched on Oct. 1, 2016, three months earlier than in previous cycles, to help students and their families more proactively plan and understand their financial aid options for college. As of March 31, 2018, 18.6 million applications were submitted for the 2017-18 school year. This represents a one percent increase in applications compared to the previous application cycle through March. Through March 31, 2018, 10.4 million applications have been submitted for the 2018-2019 FAFSA cycle. This figure is on par with the number of applications submitted during the same time period in the prior 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 be counted once in that category.
In the portfolio reports by servicer, please note the differences in portfolio composition between the Title IV Additional Servicers (TIVAS) and the Not-For-Profit Servicers (NFPs). The NFP portfolio is overwhelmingly made up of accounts received from the Direct Loan Servicing Center in 2011-12. These loans already were in repayment and current at the time they were transferred. As a result, the loans are much stable and mature than the TIVAS portfolios. The TIVAS have high volumes of new borrowers who are more likely to move 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 first started receiving new borrowers in January 2015, many of those loans still are in an in-school status.
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.
The Portfolio by Delinquency Status reports should not be directly compared with the quarterly performance metrics for federal student loan servicers. These reports define current repayment as less than 31 days delinquent while the most recent contracts with the servicers define current repayment as five or less days delinquent. The servicer contract performance metrics are at the borrower level while the FSA Data Center reports are based at the loan level. As a result, there may be duplication across the FSA Data Center reports in the event a borrower has loans in varying delinquency statuses.
In the loan and grant reports, the first worksheet 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 worksheet of an award year’s fourth quarter report will show data for the full award year. As 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 because loan and grant reports generally are run shortly after the quarter’s end, initial runs often under-report activity as a result of reporting delays and activity that occurs for the award year after the run date (for example, summer disbursements).
The Consolidated Appropriations Act of 2016 required the Department to allocate new student loan borrower accounts to eligible student loan servicers on the basis of their performance compared to all loan servicers utilizing established common metrics, and on the basis of the capacity of each servicer to process new and existing accounts no later than March 1, 2016. Prior to the passage of the Consolidated Appropriation Act, the Department established common performance metrics across all servicing contracts but maintained separate allocation pools to reflect differences in portfolio composition.
Given this requirement, beginning on March 1, 2016, new allocation percentages were based on performance under the established common metrics compared across all loan servicers. Since March 2016, the Department has developed a revised methodology that better reflects differences across servicer portfolios while maintaining the established common metrics.
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.