Students and Families Responsibly Using Private Student Loans to Cover College Costs

Story image for Education Loans from NBC2 NewsStudents and families continue to responsibly use private student loans to cover college costs according to MeasureOne’s Private Student Loan Report. The semi-annual report from the higher education data and analytics firm focused on the $1.48 trillion-dollar student loan market shows new originations increased nearly 5 percent year over year in AY 2016/17 while delinquency and defaults continue to remain at near-historic lows with a healthy portion of loans in active repayment.

Private student loans, which are based on a credit and ability to repay assessment, make up 7.65 percent ($113.21 B) of total student loans outstanding as of Q3 2017. The remaining 92.35 percent of the $1.48 trillion in student loans are federal loans originated by the Department of Education.

Specifically, the MeasureOne Private Student Loan Report found as of the end of Q32017:

  • Private student loan originations in AY 2016-2017 increased 4.71 percent year over year to $8.11 billion, and in academic year to date AYTD 2017-2018 increased 1.21 percent year over year to $3.26 billion.
  • Early stage delinquency (30 to 89 days past due) stands at 2.59 percent of loans in repayment and late stage delinquency (90 days or more past due) at 1.59 percent of loans in repayment; at or near the lowest reported levels for a Q3 for both undergraduate and graduate loans since 2008.
  • Share of loans in forbearance grew to 2.88 percent primarily due to an increase in forbearance/economic hardship assistance to students affected by natural disasters in Q3 2017.
  • Annualized gross defaults were 2.04 percent of loans in repayment.
  • The total outstanding balance for private student loans at end-Q3 2017 was $64.23 billion, dipping 0.45 percent year over year. Undergraduate loans account for 86.99 percent of outstanding balance and graduate loans make up the balance 13.01 percent.

“Students and families continue to responsibly and judiciously use private student loans to cover college costs and once leaving school, they are effectively paying them back,” said Dan Feshbach, CEO for MeasureOne. “It is important to have a healthy private student loan market for students and their families, giving them multiple financing options to achieve their education goals. Our report again confirms a very stable and well performing market.”

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.

Nine additional lenders including College Ave and eight members of the Education Finance Council (AlaskaCommission on Post-Secondary Education, Georgia Student Finance Commission, Iowa Student Loan, Kentucky Higher Education Assistance Authority, Rhode Island Student Loan, South Carolina Student Loan, Utah Higher Education Assistance Authority, and Vermont Student Assistance Corporation) provide data for the report. In aggregate, the participants contributing data to this report represent approximately 63 percent of all private student loans outstanding in the U.S. making this report the most comprehensive to date.