Today, Federal Student Aid (FSA) released new quarterly portfolio reports on its FSA Data Center website with key data and other information about the American student aid programs from June 30, 2021.
These reports continue to reflect the novel flexibilities applied during the pandemic to borrower accounts as prescribed in the CARES Act and extended by executive actions through the final deadline of January 31, 2022. As a result, payments are paused, collections are stopped, and interest is waived on all Department of Education-held student loans. This includes Federal Family Education Loan (FFEL) Program loans and Federal Perkins Loan Program loans owned by the Department, as well as all Direct Loans (DL). It also includes FFEL loans in default being managed by guaranty agencies.
In addition to the quarterly application, disbursement, portfolio, and forgiveness reports, we are releasing servicer performance metrics and allocations that took effect on September 1, 2021. FSA posts these reports to its FSA Data Center in support of open government initiatives to help ensure consistency, increase transparency, and establish self-service opportunities for stakeholders.
Key Findings in Reports
While not exhaustive, the information below provides a snapshot of key findings from these reports. It should be noted that student loans are highly cyclical in nature, so figures generally should be compared year over year. However, the unprecedented CARES Act changes may preclude meaningful comparisons for this period.
Outstanding Loan Portfolio Overview
As of June 30, 2021, the outstanding federal student loan portfolio is $1.59 trillion, representing 42.8 million unduplicated student aid recipients. Direct Loans now represent 85% of the portfolio; FFEL loans represent less than 15%; Federal Perkins Loans are a negligible fraction. The ED-held portfolio is now more than $1.4 trillion, representing more than 90% of the total amount. Portfolio growth has slowed since 2010, as new disbursements have declined. Year-over-year, the total federal loan portfolio has increased 3% or about $46 billion. The DL portfolio is up about 5%, while the FFEL portfolio is down almost 6%; Perkins Loans continue to be phased out.
Shift in Loan Statuses
As a result of special pandemic flexibilities for student loans, the number of recipients in repayment status has fallen sharply over the last 15 months. Less than 500,000 Direct Loan recipients were in repayment status as of June 30, 2021, compared to 18.1 million recipients in March 2020, just a few days after the CARES Act was passed. Only one percent of all outstanding Direct Loan dollar balances are currently in repayment status, consisting largely of customers who opted out of the CARES Act payment pause. About 24 million Direct Loan recipients with outstanding loans of about $967 billion are now in forbearance status, and over 99% of those balances are in the CARES Act forbearance. When including ED-held FFEL recipients, approximately 25 million recipients with more than $1 trillion in outstanding loan balances are now in forbearance.
ED-Held Delinquencies and Direct Loan Defaults
With almost all federal student loan borrowers now in forbearance, no DL borrowers entered default during this period. The more detailed DL delinquency demographic reports have been temporarily suspended.
Income-Driven Repayment Enrollment
Despite the repayment pause for most borrowers, enrollment in income-driven repayment (IDR) plans has slightly increased during the pandemic. As of June 2021, 8.3 million DL recipients were enrolled in IDR plans, up 1% from June 2020. Adding ED-held FFEL recipients, 8.6 million unique recipients are enrolled in IDR plans. That is 30% of all ED-serviced recipients or, in dollar terms, 47% of ED-serviced balances.
Free Application for Federal Student Aid (FAFSA) Volume and Aid Disbursements
FSA has posted preliminary disbursement data for the full 2020-2021 award year as of June 30, 2021. Given end-of-year adjustments and summer disbursement reporting, which comes after June 30th, the data should be treated with caution as FSA will continue to provide quarterly refreshes of the data as it stabilizes. While application data for 2020-2021 decreased 1%, the preliminary disbursement data for loans and grants were down about 6% compared to the June 2020 preliminary data from the 2019-2020 award year. Applications have been declining since award year 2011–12, except for a modest increase in award year 2017–18 when the application cycle was extended from 18 to 21 months. Applications for the 2021–22 award year so far are down about 2% from this time last year.
Borrower Defense to Repayment
The law allows borrowers to seek cancellation of their loans if their school misled them or engaged in illegal misconduct. In March 2021, the Department announced adoption of a streamlined approach to granting full relief, rather than partial relief, for approved borrower defense claims. The June report shows the impact, with processed discharges now totaling almost $1.1 billion, compared to $575 million in March 2021.
Public Service Loan Forgiveness
In October, the Department announced a new limited PSLF waiver that will help borrowers employed in public service make greater progress toward PSLF, including 22,000 that will receive forgiveness without further action on their part. The Department is providing a state-by-state breakdown of these 22,000 borrowers.
The other updates to the PSLF reports do not reflect the effects of the limited PSLF waiver.
Cumulatively, almost 1.3 million borrowers have had their employment eligibility certified and have received a qualifying payment count so they can keep track of their progress toward PSLF. Of these, only about 8,300 borrowers have received PSLF discharges through June 2021, totaling $756 million. Congress has sought to simplify and streamline this relief for borrowers through Temporary Expanded PSLF (TEPSLF). As a result, an additional 3,700 borrowers have received TEPSLF discharges totaling $166 million in discharges through June 2021.
In November 2020, FSA released a new combined Certification and Application form that covers both PSLF and TEPSLF. Borrowers previously had to submit separate forms to certify employment or apply for forgiveness. Since the new form was released (through June 2021), FSA has received almost 497,000 applications from approximately 404,000 borrowers. Of these, almost 225,000 have been completed and processed, 175,000 remain in processing, and 97,000 were missing necessary information. Almost all (99.7%) of the 225,000 completed and processed applications came from borrowers whose loans and employment meet the legal requirements to receive credit toward PSLF.
Appendix: Key Items to Note While Reviewing These Reports
To accurately interpret the data, please note the following items:
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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.
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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 was originally 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 were more stable and mature than the TIVAS portfolios. In addition to new accounts, the TIVAS service FFEL Program loans purchased through the Ensuring Continued Access to Student Loans Act and loans of all statuses received from the Direct Loan Servicing Center in 2011–12. The NFPs first started receiving new borrowers in January 2015.
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The Consolidated Appropriations Act of 2016 required the Department to allocate new student loan borrower accounts to eligible student loan servicers based on their performance compared to all loan servicers, using established common metrics and based on the capacity of each servicer to process new and existing accounts by March 1, 2016. Before the Act was passed, the Department established common performance metrics across all servicing contracts but maintained separate allocation pools to reflect differences in portfolio composition. As a result, after March 1, 2016, new allocation percentages were based on performance under the established common metrics compared across all loan servicers. The Department has since developed a revised methodology, which it continues to implement, that better reflects differences across servicer portfolios while maintaining the established common metrics.
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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 servicer contracts define current repayment as less than 5 days delinquent. The servicer contract performance metrics are at the borrower level while the FSA Data Center reports are based at the loan level. There may be duplication across the FSA Data Center reports when borrowers have loans in varying delinquency statuses.
The FSA Data Center was launched in 2009 to increase government transparency by posting information useful to businesses, institutions, the media, and individuals. In addition to the reports listed above, FSA 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. FSA is committed to continuing to expand the data sets available on the FSA Data Center to foster greater understanding of these issues.