The United States Department of Education’s Office of Federal Student Aid (FSA) has announced a number of updates to its Data Center, which houses a collection of performance data on the student loan portfolio.
The Data Center will now include metrics on applications that are submitted for Public Service Loan Forgiveness (PSLF). New data will also show that an increasing number of borrowers are enrolling in income-based repayment plans at the same time that new defaults and delinquency rates continue to drop.
Close to one million applications have been submitted since the department put its voluntary process in place to assess the potential eligibility of borrowers under the PSLF program, two-thirds of which have already been approved. After approval, borrowers are able to have the remaining balance on their Direct Loans forgiven after 120 monthly payments are made under a qualifying repayment plan so long as they are working full-time for a qualifying employer, including government organizations and non-profits.
“Today’s report demonstrates measurable progress in our efforts to help borrowers successfully manage repayment,” said U.S. Secretary of Education John B. King Jr. “We want to ensure that those Americans who have devoted a decade of their careers to public service are not burdened by debt while making invaluable professional contributions to their communities.”
Many students who consider a career in public service, including teaching, nursing, public health officials, or at a non-profit organization are faced with the concern that their salary may not be high enough to cover their student loan debt as well as their monthly bills.
Those who meet the requirements of the program will have their remaining outstanding balances forgiven beginning in October 2017. The PSLF program was created in 2007 after Congress had passed the College Cost Reduction and Access Act.
The Obama administration has continued its efforts toward helping borrowers manage repayment, most recently through the Pay As Your Earn (PAYE) plan. The plan allows borrowers to cap payments at 10% of their income and have any remaining debt forgiven after 20 years of repayment. In addition, employees of public service could see their loan forgiven after only 10 years of making payments while also meeting PSLF requirements.
The Quarterly Student Aid report discussed a number of additional topics, including enrollment increases in Income-Driven Repayment Plans, with 5.3 million Direct Loan borrowers enrolled in such plans as of June 2016, a 36% increase from June of last year, and an increase of 110% from June 2014.
In addition, new Direct Loan defaults have seen a decrease with around 260,000 borrowers, or 1.7%, entering default in the most recent quarter in comparison to 2.1% one year ago. At the same time, Direct Loan and Education Department-held Federal Family Education Loan delinquency rates fell when compared to the same time period last year.
The department has also collected close to $14.1 billion in defaulted student loans for FY2016 through the quarter ending June 30. This includes nearly $7.4 billion that had been recovered by guaranty agencies and $6.7 billion by private collection agencies. In total, $9.5 billion, or over 67%, of total recoveries were the result of successful loan rehabilitations.