![]() From March 2021, delinquency for FFEL borrowers continued to rise, returning to pre-pandemic levels by the end of 2021. Since voluntary forbearance for FFEL loans typically lasted only a few months, delinquency began to increase again late in 2020 before another round of stimulus payments at the beginning of 2021 drove another small decline. Like Direct loans, many previously delinquent FFEL loans were marked current during forbearance driving the delinquency rate from 5.4 percent just before the pandemic to a low of 3.1 percent in July 2020. The forbearance rate for FFEL borrowers increased from 26 percent in February 2020 to a peak of 36 percent in June 2020 before falling to levels on par with private loans. The rate of forbearance for private loans increased from 26 percent in February 2020 to 33 percent in May 2020 before steadily declining. Meanwhile, student loan borrowers with either private or FFEL loans needed to request voluntary forbearance from their loan servicer. Consequently, all previously delinquent but not defaulted loans were marked current, driving this rate to zero during the pandemic. After the onset of the pandemic, forbearance rose across all loan types with Direct loans rising to almost 100 percent due to administrative forbearance. Prior to the pandemic, the share of borrowers in forbearance remained stable across all three student loan types with FFEL loans and private loans at around 26 percent and Direct loans at roughly double the rate largely due to the higher share of borrowers in in-school deferment. Our calculation of the delinquency rate differs from the typical calculation in the New York Fed’s Quarterly Report on Household Debt and Credit because we focus on borrowers instead of balances and we exclude defaulted loans. The chart below shows the share of borrowers in either deferment or forbearance (left) and the share of borrowers with a student loan at least ninety days delinquent but not in default (right) since the first quarter of 2019. ![]() ![]() Student Loan Forbearance and Delinquency during the Pandemic ![]() The table below details these loans, denoted Direct, FFEL, and private loans, on the eve of the pandemic. The second and third categories include remaining loans that were not covered by the interest waiver or automatic forbearance: FFEL loans still owned by commercial banks and private loans which were either originated by private entities or were federal loans refinanced into the private market. The first includes Direct loans disbursed by the federal government and some legacy loans disbursed under the FFEL program and now owned by the federal government. Although we do not directly observe the owner of a loan, we use the administrative forbearance event to sort loans into one of three mutually exclusive categories. In this analysis, we use data from the New York Fed Consumer Credit Panel, an anonymized, nationally representative 5 percent sample of credit reports from Equifax. The difficulties faced by these borrowers in managing their student loans and other debts suggest that Direct borrowers will face rising delinquencies once forbearance ends and payments resume. FFEL borrowers, who were not covered by the automatic forbearance, struggled with their debt payments during this time. Data show that Direct federal borrowers slowed their paydown, with very few making voluntary payments on their loans. However, 10 million borrowers with private loans or Family Federal Education Loan (FFEL) loans owned by commercial banks were not granted the same relief and continued to make payments during the pandemic. As a result, nearly 37 million borrowers have not been required to make payments on their student loans since March 2020, resulting in an estimated $195 billion worth of waived payments through April 2022. In response, executive and legislative actions in March and April 2020 provided unprecedented debt relief by temporarily lowering interest rates on Direct federal student loans to 0 percent and automatically placing these loans into administrative forbearance. The onset of the COVID-19 pandemic brought substantial financial uncertainty for many Americans. Jacob Goss, Daniel Mangrum, and Joelle Scally
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