Over the last several months, the Department of Education (ED) has seen an increase in the number of borrowers enrolling in income-driven repayment (IDR) plans, a decrease in Direct Loan default and delinquency rates, and some progress toward tracking Public Service Loan Forgiveness eligibility for some borrowers, according to a new data report from the Office of Federal Student Aid (FSA).
The quarterly report, which tracked data between Jan. 1, 2017 and March 31, 2017, showed that the overall federal student loan portfolio increased slightly between the first and second quarters of fiscal year 2017, from about $1.30 trillion to $1.33 trillion. During that same time, the number of unduplicated borrowers slightly decreased from 42.4 million to 42.3 million.
There has also been a significant increase in the number of FAFSA applications submitted during this time period for the 2017-18 award year, according to the report. This FAFSA cycle was the first during which the application was available on October 1 – three months earlier than previous cycles. As of the end of the second quarter, 10.4 million applications were submitted for the 2017-18 award year – a 27 percent increase in the number of applications submitted by March 31 during the previous cycle.
However, the increase does not necessarily mean more FAFSA applications will be submitted overall, the report said. Rather, the increased number could simply be a result of families taking advantage of the Early FAFSA.
Enrollment in IDR plans continued to increase. Between March 2016 and March 2017, the number of Direct Loan borrowers enrolled in IDR plans increased by 33 percent, to 6.2 million. While there are also 1.2 million Federal Family Education Loan (FFEL) borrowers enrolled in income-based repayment and income-sensitive repayment plans, many are also Direct Loan borrowers. Together, about 6.5 million unique borrowers are enrolled in IDR plans, the report said. The newest IBR plan, Revised Pay As You Earn (REPAYE), saw the largest increase in borrower enrollment between the first and second quarters of 2017, increasing from 1.23 million to 1.52 million borrowers.
FSA also reported that for the fifth consecutive quarter, new defaults on Direct Loans (as a percentage of borrowers in repayment the previous quarter) have decreased. This measure is not to be confused with ED’s annually-released cohort default rate.
In the most recent quarter of the 2017 fiscal year, 248,000 borrowers, or 1.5 percent of borrowers who were in repayment the previous quarter, entered default. One year ago, that number was 1.8 percent. The percent of dollars in repayment last quarter that have entered default has also decreased. In the most recent quarter, about 1 percent of dollars in repayment entered default, compared with 1.2 percent one year ago.
The report also found that Direct Loan delinquency rates have decreased in the last year. Of the more than 17 million borrowers in active repayment in the second quarter, the delinquency rate – which includes borrowers with payments 31 days or more past due – was 17.8 percent, compared with 18.5 percent one year ago.
The report also gave an update on how many borrowers have submitted voluntary Employment Certification Forms (ECF) for Public Service Loan Forgiveness (PSLF), and how many have been approved. The first cohort of borrowers will be eligible for forgiveness in October 2017. As of March 2017, about 1.5 million ECFs have been submitted, according to the report, and about two-thirds have been approved. In total, about 612,000 borrowers had submitted at least one approved ECF.
Publication Date: 7/12/2017