Overwhelming Majority of Private Student Loan Customers Back to Making Regular Payments to Pay Off Their Private Student Loans
MeasureOne today released its Private Student Loan Report, an industry leading research report leveraging MeasureOne’s custom analytics services. This 16th edition of the report again confirms that students and families continue to effectively manage payments – with the overwhelming majority back to making regular payments despite the pandemic – and fewer than 1% of loans defaulting annually. Forbearance levels increased due to efforts by lenders to assist families who experienced hardship due to the pandemic, but those levels have since stabilized and are currently at 3.1% of loans in repayment.
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“While the ongoing pandemic has created financial challenges for students and families, private lenders stepped up to assist their customers during this unprecedented time,” said Elan Amir, CEO for MeasureOne. “It is encouraging to see so many students and families back to making regular payments, a sign that a recovery is in sight. In addition, the fact that delinquency and defaults remain at historic lows and forbearance levels are stabilizing, reaffirms how strong underwriting and focus on ability to repay leads to customer success.”
Private student loans, which are fully underwritten to assess creditworthiness and ability to repay, make up approximately 7.9% of total student loans outstanding as of Q1 2021. The remaining 92.1% of the $1.73 trillion in student loans are federal loans owned or guaranteed by the Department of Education.
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The Private Student Loan Report (“Report”) reflects data as of end-Q1 2021 for private student loans and does not include federal student loan data. The performance attributes for this quarter show a promising recovery from the initial impact of the pandemic. As of the end of Q1 2021, the report found:
- Private student loan originations in Full Academic Year 2019/20 were $10.14 billion, up 4.98% year-over-year, and Academic Year to Date [AYTD] 2020/21 (Q3 2020 to Q1 2021) was at $7.63 billion, a 15.2% drop year-over-year.
- Forbearance utilization dropped 56% at end-Q1 2021 to 3.12% from the 2020 Q2 peak of 7.04% as borrowers were able to exit the industry customer relief programs.
- Early-stage delinquency (30 to 89 days past due) rate was 1.73% of loan balances in repayment (excluding forbearances as usual), and similarly the late-stage delinquency (90+ days past due) rate was 0.73%. Both are near historic lows.
- Annualized gross charge-offs were 0.97% of loan balances in repayment and are at a historic low.
- The total outstanding balance for private student loans represented in the Report was $56.63 billion (including in-school loans but excluding consolidation, refinance, and parent loans).
- Undergraduate loans accounted for 88.73% and graduate loans 11.27% of loans originated in AYTD 2019/20.
The bi-annual Report includes continuous contributions from the five largest student loan lenders and holders: Citizens Bank, N.A., Discover Bank, Navient, PNC Bank, N.A., and Sallie Mae Bank. In addition to these MeasureOne Private Student Loan Consortium members, this report includes data from 9 other student lender contributors. In total, these contributors represent the vast majority of in-school originations and a majority of the private student loans outstanding in the U.S.
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