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
March 31, 2023.
These reports reflect the novel flexibilities applied to borrower accounts as prescribed in the CARES Act and extended by executive actions. As a result, payments are paused, and interest is waived on all U.S. Department of Education (ED)-held student loans. Default collections have also stopped for both FFEL and DL.
FSA posts 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.
Outstanding Loan Portfolio Impact
As of March 31, 2023, approximately 43.6 million unduplicated student loan recipients have about $1.64 trillion in outstanding loans. This represents an increase of nearly $25 billion in the outstanding loan balance and 600,000 in the number of student loan recipients since last year.
Although there have been modest increases in Direct Loan balances, the balances of FFEL loans have been declining more rapidly, in part due to the temporary limited PSLF Waiver and other loan discharge programs.
As a result of these shifts, ED now directly manages 93 percent (or $1.5 trillion) of the total federal loan portfolio. The remainder includes school-held Perkins Loans, lender-held FFELP loans, and the FFELP loans held by guaranty agencies.
Shift in Loan Statuses
As a result of special COVID-19 flexibilities for federal student loans, the number of recipients in repayment status has fallen sharply since March 2020. Almost 27 million Direct Loan (DL) recipients, with approximately $1.1 trillion in outstanding loans, are in forbearance status, and more than 99% of these balances are in the special CARES Act forbearance.
In fact, about 305,000 DL recipients have opted out of the payment pause and thus were in an active repayment status as of March 31, 2023, compared to 18.1 million recipients in March 2020, shortly after the CARES Act became law. Notably, some borrowers whose accounts remain in a COVID forbearance status continue to make voluntary payments, even though they are not required to do so.
Income-Driven Repayment Enrollment
Despite the repayment pause affecting most borrowers, enrollment in income-driven repayment (IDR) plans had slightly increased during the COVID-19 emergency until recently. In September 2022, IDR enrollment among DL recipients decreased for the first time since public reporting began nine years ago. While the decrease was insignificant and is expected to be temporary, the decrease continued this quarter, going from 8.37 million recipients owing $522 billion in March 2022 to 8.26 million borrowers owing $512 billion in March 2023. These decreases are largely driven by the number of borrowers who have entered repayment during the COVID-19 emergency without selecting a repayment plan. These borrowers have immediately been transitioned into forbearance due to the COVID-19 emergency. Once repayment begins, a considerable number of these borrowers are likely to enroll in an IDR plan. To a lesser degree, borrowers receiving forgiveness under the limited PSLF waiver may also contribute to the overall decrease as they exit the program, since PSLF borrowers tend to be enrolled in IDR plans. In terms of dollars, more than 42 percent of all DL dollars in repayment, deferment or forbearance reflect borrowers who are enrolled in an IDR plan today, compared to about 46 percent one year ago and 48 percent two years ago.
Impact on Direct Loan Defaults
With almost all non-defaulted federal student loan borrowers now in forbearance, no new DL borrowers have entered default since March 2020. In fact, the number of cumulative DL borrowers in default continues to decrease, now 4.6 million borrowers compared to about 4.9 million borrowers one year ago. The number of defaulted borrowers in the FFEL Program has also decreased slightly, now fewer than 3.4 million borrowers. (Note that the DL and the FFEL total defaults should not be summed because many borrowers have loans in both programs.) Cumulatively, approximately 7.3 million unique recipients have loans in default, compared to about 7.5 million one year ago.
Appendix: Key Items to Note While Reviewing These Reports
To accurately interpret the data, please note the following item:
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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.
The FSA Data Center was launched in 2009 to increase government transparency by posting information useful to businesses, postsecondary institutions, the media, and individuals.