On Aug. 8, 2014 Federal Student Aid (FSA) released the Federal Student Loan Portfolio, a series of data reports on student loan balance and delinquency figures for the Direct Loan, Federal Family Education Loan (FFEL), and Perkins Loan programs. This data provides information not previously accessible to researchers and analysts. Prior to this release the only available data on student loan debt was on the amount of Direct Loan, FFEL, and Perkins Loan debt in repayment, the total amounts of delinquent student loan debt, and use of the various repayment plans. This newly released portfolio can now be used to analyze economic growth and effects of student debt on the federal budget.
With a total of 39.9 million unduplicated borrowers between the Direct Loan, FFEL, and Perkins Loan programs amounting to $1.1 trillion in outstanding student loans during Q3 (beginning on April 1, 2014 and ending on June 30, 2014), the portfolio shows that outstanding loan dollars have more than doubled with a 41 percent increase in loan recipients since 2007. The number of dollars in repayment also increased significantly in just one year—from Q3 of 2013 to Q3 of 2014 there was a 26.5 percent increase.
The portfolio also highlights a decrease in the transfer of Direct Loans to collection agencies with $1.6 billion in Q3 of 2014 in collections for 100,000 recipients in comparison to $4.1 billion in Q3 of 2013 in collections for 220,000 recipients, amounting to a 61 percent decrease of outstanding dollars in collections and a 55 percent decrease of borrowers whose loans have been referred to collection agencies. The percentage of Direct Loan dollars in default has increased 22.6 percent within this same period of time, while the increase is 4.8 percent for FFEL dollars in default.
Although the Student Loan Portfolio offers some additional clarity on student loans, media outlets including The Huffington Post and The Chronicle of Higher Education have both expressed concern and called for additional information. According to The Huffington Post, this data highlights the fact that “about 51 percent of Americans with student loans made directly by the Education Department, known as Direct Loans, have either fallen behind or are not making expected payments.” Issues with figures on delinquency for borrower loan repayment statuses also remain. According to The Chronicle of Higher Education, the exclusion of data on student-specific loan statuses may hinder efforts to better understand borrower debt burdens. For example, “One borrower could have multiple delinquent loans, or she could have one loan in repayment and another in deferment. As a result, you would have to look at the number of dollars outstanding, which really shows the financial impact on the government, rather than percentage of borrowers in each loan status.”
Other concerns lie in the fact that the delinquency statuses of older FFEL loans are not included because they are largely serviced by private lenders. The inability to corroborate existing data with new data is also difficult since the Federal Student Loan Portfolio considers loans as “in default” when they are more than 360 days delinquent and already transferred to the debt-management and collections system, rather than ED’s standard definition of default, which is 270 days delinquent.
Publication Date: 8/26/2014