New FSA Data Report Shows Decrease in Loan Defaults, Delinquency Rates
By Joelle Fredman, NASFAA Staff Reporter
The Department of Education (ED) has seen a significant decrease in Direct Loan delinquency rates and defaults over the past couple of months, according to new data from the Office of Federal Student Aid (FSA).
FSA, in its latest series of quarterly reports analyzing data from Jan. 31, 2018 to March 31, 2018, found that the outstanding federal student loan portfolio is $1.41 trillion, an increase of 5.7 percent, or $75 billion, since the same time last year. FSA added that the “growth of the portfolio has slowed since 2010 as new disbursements have declined.”
FSA found that the rate of delinquency on Direct Loans, which it defines as a lack of payment for 31 or more days, was at an “all-time low” since FSA began reporting on the metric in 2013. FSA wrote that “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.” Specifically, FSA found that the number of borrowers delinquent on their loans decreased by 17 percent compared to the same quarter last year, from 17.8 percent to 14.7 percent, and that the percent of dollars in repayment that were considered delinquent also decreased by 16 percent, from 13.8 percent to 11.6 percent.
FSA also reported that new Direct Loan defaults remained steady year-over-year, though it warned that “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.” FSA found that the outstanding loan balance of new defaulters was $6.1 billion as of the second quarter of fiscal year 2018, as 1.5 percent (273,000 borrowers) who were in repayment the previous quarter entered into default.
In addition to data on loan default and delinquency, FSA also reported that enrollment in income-driven repayment (IDR) plans has continued to increase, growing 11 percent since last March to 6.9 million borrowers, and that the number of FAFSA applications submitted during this quarter for the 2018-19 award year has remained steady. Through March, FSA reported that 10.4 million applications were submitted for the 2018-19 FAFSA cycle, which was “on par” with figured from the same time last year.
FSA’s report also continued to track the number of borrowers who submitted voluntary Employment Certification Forms (EFCs) for the Public Service Loan Forgiveness (PSLF) program, and found that as of March 31, 2018, around 874,000 had submitted at least one approved form. FSA added that it will include more information about borrowers on track to qualify for the program in an upcoming report.
Read through more key findings from the entire quarterly reports, and explore data on FSA’s Data Center website.
Publication Date: 6/25/2018
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