Three Charts on Student Loan Non-Repayment

The Wall Street Journal published an op-ed I authored ("The Hidden Student-Debt Bomb") last week on the latest figures out from the U.S. Department of Education on the status of the federal student loan portfolio. It discussed the rising share of loans and borrowers enrolled in the forbearance benefit or Income-Based Repayment. It also showed that, contrary to headlines about declining student loan defaults, the share of borrowers and loans in default is still rising in the overall portfolio. A few tables that did not appear in the Journal illustrating those trends are published below. They mostly speak for themselves, but the op-ed provides the context for those who are interested (and have an account).

Note that the tables on forbearance and default were calculated by excluding loans that have not yet entered repayment status. These include loans under the in-school and grace period statuses, as well as those in deferment because, according to the Department, the vast majority of loans in deferment belong to borrowers who re-enrolled in school and are therefore not required to make payments. That approach makes the analysis unique, as others tend to include all loans in the denominator when measuring loan performance, even though a large share of those borrowers have no loans due.

The forbearance and default charts also show the borrowers and loans for the entire federal student loan portfolio, which includes loans made under the Direct Loan program and the defunct Federal Family Education Loan (FFEL) Program. The table on income-based repayment plans covers loans that have come due under the Direct Loan program and are in the repayment, forbearance or deferment status. No information on repayment plans is available for the FFEL program.