CFPB Data Point: Student Loan Repayment

By Jael Greene

A recent report by the Consumer Financial Protection Bureau (CFPB) examines growth in student loan balances over the last fifteen years in order to help understand how larger student loan balances affect a borrower’s financial decisions. The report analyzed data from the CFPB’s Consumer Credit Panel (CCP) using a nationally representative sample of de-identified credit records to examine the trends in repayment status of student loans. These records provide payment histories and outstanding balances of both federal and private student loans. Annual repayment cohorts were created in order to compare borrowers across time and examine similarities in repayment trends.

Among the key findings:
– Student loan borrowers who have recently entered repayment status have fully repaid their loans at similar rates to those whose repayment status began fifteen years.
o Twenty-five to 30 percent of borrowers in the older cohorts did not pay off their loans in the standard ten-year repayment plan. More recent cohorts seem to be following that same trend.
– The percentage of borrowers with higher loan balances ($20,000 or more) when they enter repayment status has increased over the last fifteen years.
o Borrowers owing more than $20,000 in student loans represented only 20 percent of all student loan borrowers entering repayment status fifteen years ago. Now they represent more than 40 percent of all student loan borrowers entering repayment status.
o Fifteen years ago, borrowers owing $50,000 or more in student loans represented only 5 percent of all student loan borrowers. Currently, these borrowers have increased to 16 percent of all student loan borrowers.
– The age at which student loan borrowers enter repayment has changed since 2003.
o The percentage of borrowers who entered the start of repayment status after age 34 increased from 25 percent to nearly 50 percent.
o The percentage of borrowers beginning repayment under age 25 decreased from 30 percent to 15 percent.
– Repayment paths for student borrowers vary considerably.
o The percentage of borrowers that saw their student loan debt grow while in repayment status increased from 8 percent in 2008 to 12 percent in 2016.
o Over the last 10 years, borrowers who were able to fully repay their student loans within five years of entering repayment status declined from 50 percent to 41 percent.
o Sixty percent of borrowers not paying down their loan balances five years after entering repayment status are delinquent on their loans.