New Data Shows Almost All Borrowers Taking Advantage of Pause in Student Loan Payments

Related Topics in the Ref Desk: Direct Loans; Deferment; Forbearance; Discharge, cancellation, forgiveness

By Owen Daugherty, NASFAA Staff Reporter

No borrowers with Direct Loans (DL) entered default during the previous quarter, as all but 500,000 borrowers were taking advantage of the federal forbearance period that paused payments and interest accrual on all federally held student loans, according to quarterly data released this week by the Office of Federal Student Aid (FSA).

The outstanding federal student loan portfolio increased by $49 billion since this time last year and now stands at $1.59 trillion, held by just under 43 million borrowers. 

Of the outstanding debt, 90% is owned by the Department of Education (ED). Even as payments were paused, enrollment in income-driven repayment (IDR) plans has risen, with a 3% increase compared to March of last year. The new figures show that 30% of all ED-serviced borrowers are enrolled in IDR plans, holding 48% of ED-serviced balances, according to a release detailing the data.

"We are committed to sharing data and information so that all Americans can better understand the value of federal student aid and how it actually works," FSA Chief Operating Officer Richard Cordray said in the release.

New data was also released highlighting the Public Service Loan Forgiveness (PSLF) program. From Nov. 9, 2020 to April 30, 2021, 98% of applications for forgiveness through PSLF were denied.

FSA sought to provide further explanation for why the much maligned program has oftentimes failed to provide public service workers with loan forgiveness. 

“Over the years, PSLF has spawned much confusion and frustration,” the release noted. “Millions of people are employed in public service, including teachers, firefighters, law enforcement, and some nonprofit workers, yet only about 5,500 borrowers have received PSLF discharges thus far, totaling $453 million.”

ED last year announced it would be combining the applications for loan forgiveness for both the PSLF program and the Temporary Expanded PSLF (TEPSLF) program in a single form, made available to the public in November 2020. A newly revamped PSLF help tool was also released at the time to give users a better design interface and help borrowers more easily determine their eligibility for the program.

Between November through the end of April, FSA received more than 391,000 submissions of the combined form. Of those, more than 168,000 have been completed and processed, 146,000 remain in processing, and 76,600 were missing necessary information. Of the 168,000 completed and processed applications, more than 99% came from borrowers whose loans and employment meet the requirements to receive credit toward PSLF, but they have not been in repayment long enough to meet the required 120 months of qualifying employment or qualifying payments.

“For most borrowers, it is simply a matter of timing,” the release stated. “Over 82% of borrowers who do not yet qualify for forgiveness have eligible loans that have been in repayment less than 120 months.”

Of the remaining 18% who do not qualify for forgiveness through PSLF, 14% do not yet have 120 months of qualifying employment and 4% have met all requirements except for 120 qualifying payments.

PSLF has long been scrutinized, with a 2019 report detailing that only 1.1% of applicants had their forgiveness approved. A recent report found that over the course of a decade, ED failed to provide any regulation, guidance, or direction to student loan companies that advise public service workers about their right to PSLF.

“FSA is exploring what additional data can be provided about processing times, reasons that forms are incomplete, and borrower resubmissions to further improve these reports,” ED added in the release. 


Publication Date: 6/17/2021

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