Today, Federal Student Aid (FSA) released two new sets of quarterly portfolio reports on its Data Center website with key data and other information about federal student aid programs as of December 31, 2020 and March 31, 2021.
“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,” said FSA Chief Richard Cordray. “We are living through novel times, and the numbers show it. We also are spotlighting recent improvements in the Public Service Loan Forgiveness program, while underscoring the need for more work ahead to fulfill the original promise that Congress made to police officers, firefighters, teachers, and many others.”
The reports reflect the novel flexibilities applied to borrower accounts as prescribed in the Coronavirus Aid, Relief, and Economic Security (CARES) Act and extended by executive actions through September 30, 2021. As a result, payments are paused, interest is waived, and collections are stopped on all Department-of-Education-held student loans as well as defaulted loans administered by guaranty agencies.
FSA has also redesigned the Public Service Loan Forgiveness (PSLF) report to align its reporting structure with the new application process that was recently implemented. This report highlights the need for continuing improvements to the PSLF and Temporary Expanded PSLF (TEPSLF) programs and FSA will refine and expand this document in future reports. In addition to the two new quarterly reports, FSA released updated figures for the reports on servicer performance metrics and allocations, and borrower defense to repayment. FSA posts these reports to its FSA Data Center to support open government initiatives to help ensure consistency and increase transparency.
As of March 31, 2021, the outstanding federal student loan portfolio is $1.59 trillion, representing 42.9 million recipients. Of that, 90% of the outstanding balances are owned by the Department.
As a result of special pandemic flexibilities for student loans, the number of borrowers in repayment status has fallen sharply. Only about 500,000 Direct Loan borrowers opted out of the payment pause and were in repayment status as of March 31, 2021, compared to 18.1 million borrowers a year ago, soon after the CARES Act was passed. More than 23 million Direct Loan borrowers with outstanding loans of about $938 billion are now in forbearance status, and more than 99% of these balances are in the special CARES Act forbearance.
With almost all federal student loan borrowers now in forbearance, no new Direct Loan borrowers entered default during this quarter. The more detailed Direct Loan delinquency demographic reports have been suspended until at least December 31, 2021, the first quarter for which borrowers could potentially be delinquent.
Despite the repayment pause for most borrowers, enrollment in income-driven repayment (IDR) plans has continued to grow during the pandemic. As of March 2021, 8.3 million Direct Loan borrowers were enrolled in IDR plans, up 3% from March 2020. Adding Federal Family Education Loan Program (FFEL) borrowers serviced by the Department, 8.6 million unique borrowers are enrolled in IDR plans. That is 30% of all ED-serviced borrowers or, in dollar terms, 48% of ED-serviced balances.
Spotlight: *Public Service Loan Forgiveness*
PSLF has recently undergone substantial changes to the application process. Over the years, PSLF has spawned much confusion and frustration. 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. Congress has sought to simplify and streamline this relief for borrowers, which was first authorized by law more than a decade ago. One legislative measure has augmented PSLF with specific changes to qualify more borrowers, known as Temporary Expanded PSLF (TEPSLF). As a result, about 3,000 borrowers have received TEPSLF discharges totaling $130 million. FSA is currently scrutinizing PSLF to see how the promise of the original law can be better fulfilled.
Today, FSA is introducing a new PSLF report that closely examines borrowers’ progress toward loan forgiveness. The new report shows some encouraging signs, as almost all borrowers with a complete, processed application are receiving some credit toward ultimate forgiveness. 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. FSA is making other improvements as well.
In November 2020, FSA released a new combined Certification and Application form that covers both PSLF and TEPSLF. Borrowers previously had to submit separate forms to certify their employment or to apply for forgiveness. Since the new form was implemented (through April 2021), FSA has received more than 391,000 applications from approximately 322,000 borrowers. Of these, more than 168,000 have been completed and processed, 146,000 remain in processing, and 76,600 were missing necessary information.
Almost all (99.7%) of the 168,000 completed and processed applications came from borrowers whose loans and employment meet the legal requirements to receive credit toward PSLF, though the vast majority of applicants have not been in repayment on a qualifying loan long enough to meet the required ten years (120 months) of qualifying employment or qualifying payments.
Cumulatively, 1.25 million borrowers have had their employment eligibility certified and have received a qualifying payment count so they can keep track of where they stand on attaining PSLF. The qualifying payment counts for these borrowers are pegged as of their last employment certification or combined form submission. Since borrowers do not formally enroll or un-enroll in PSLF or TEPSLF, FSA does not know how many of them still plan to pursue forgiveness on this basis, but those that do plan to do so will continue to make steady progress during the pause in current repayments as these months can count toward PSLF or TEPSLF, as long as the borrower’s employment continues to qualify. FSA will include information about these borrowers’ further progress toward forgiveness in its future data reports.
The new PSLF report provides greater insight into why many borrowers are not meeting the forgiveness requirements. For most borrowers, it is simply a matter of timing. Over 82% of borrowers who do not yet qualify for forgiveness have eligible loans that have been in repayment less than 120 months, meaning they could not yet have accumulated the required 120 months of qualifying employment or qualifying payments. One notable problem here relates to borrowers who consolidated older federal student loans into new Direct Loans and then were made to start over on a brand-new clock; they did not get credit for employment or payment activity on their prior loans. This issue merits further consideration. In the meantime, however, close to half the borrowers who do not yet qualify for PSLF on this basis are held back by this treatment of their consolidated loans. The remaining 18% of borrowers who do not yet qualify for forgiveness divide as follows: 14% do not yet have 120 months of qualifying employment; 4% have met all requirements except for 120 qualifying payments.
The Federal Student Aid Data Center at StudentAid.gov/data-center is a centralized source for information about the federal financial assistance programs and FSA’s operations.