Families Successfully Managing Private Student Loans According to MeasureOne Private Student Loan Report
Private student loan delinquency, charge-off rates lowest since 2008
Jul 08, 2016, 08:00 ET
SAN FRANCISCO, July 8, 2016 /PRNewswire/ -- MeasureOne, a data and analytics company specializing in student loan information, today released its semiannual Private Student Loan Report which shows that families are effectively managing their private student loans. According to the MeasureOne report on private loans originated to finance undergraduate and graduate education, delinquency and charge-off rates are improving for private student loans and are the lowest since before the 2008 economic crisis; and borrowers continue to use forbearance judiciously [Figure1]. The research shows:
- The early-stage delinquency rate (30 to 89 days past due) declined by 9.0 percent year over year and stands at 2.5 percent of total loans in repayment.
- The late-stage delinquency rate (90 days or more past due) declined by 16.8 percent year over year and stands at 1.9 percent of total loans in repayment.
- Annualized charge-offs declined by 17.7 percent year over year and stand at 2.3 percent of loans in repayment, the lowest Q1 charge-off rate since before the financial crisis. By comparison, the charge-off rate five years ago was 5.1 percent, representing a decline of 54.5 percent from Q1 2011 to Q1 2016.
- 2.2 percent are in Forbearance, a year-over-year decline of 4.1 percent, and a five-year decline of 26.6 percent compared to Q1 2011. Forbearance is a borrower-requested status in which no payments are being made, but interest accrues.
- School certification for private student loans, in which the school verifies actual funds needed and receives the funds on the student's behalf, has reached almost 100 percent with 99.3 percent of private student loans being certified. Higher school certification rates directly correlate to improved loan performance and repayment rates.
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Research in this report reflects data as of Q1 2016 for private student loans and does not include federal student loan data. Overall, private student loans make up roughly 7.5 percent – approximately $102 billion – of total student loans outstanding. The remaining 92.5 percent of the $1.36 trillion in total student loans are federal loans.
Private student loans are credit-based loans underwritten by lenders who assess a number of factors, including ability to repay, before making a decision to lend. Roughly 94 percent of undergraduate private student loans included a cosigner in academic year 2015-16*, and 61 percent of graduate private student loans included a cosigner. The vast majority of cosigners are parents and other close family members.
"It's encouraging to see such continued positive repayment trends among families with private student loans, particularly given the importance of higher education affordability in the national dialogue," said Chris Keaveney, president and chief credit officer for MeasureOne. "The data speaks for itself and shows that most families with private student loans are paying on time, selectively using forbearance and avoiding default," he said.
The data in the report is sourced from the MeasureOne Private Student Loan Consortium, a data cooperative of lenders and holders of private student loans. Members include the six largest student loan lenders and holders – Citizens Bank, N.A., Discover Bank, Navient, PNC Bank, N.A., Sallie Mae Bank and Wells Fargo Bank, N.A. In aggregate, the members of the consortium represent more than 65 percent of all private education lending activity in the U.S.
Figure 1: Key Performance and Portfolio Metrics Summary
The full MeasureOne Private Student Loan Report is available at http://measureone.com/reports
*Academic year 2015/2016 includes originations only through Q1 2016.
About MeasureOne
MeasureOne, based in San Francisco, collects, analyzes and distributes data and analysis on the student loan market in the United States. The company developed the nation's first and only Private Student Loan Consortium, a data cooperative of the nation's largest lenders and holders of private student loans. MeasureOne provides information and analytics on student lending including repayment and delinquency trends, risk assessment, capital market investments and public policy issues. For more information about MeasureOne, visit www.measureone.com.
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SOURCE MeasureOne, Inc.