The Federal Department of Education recently released up-to-date data pertaining to default and delinquency rates, Public Service Loan Forgiveness, income-driven repayment plans, and other performance data.  In short, there are some positive trends in this new data release, but there are also some other interesting takeaways to take note of.

There are two major takeaways from the student loan performance data that are related to income-driven repayment plans and default/delinquency rates.

Firstly, there were over five million total enrollments in income-driven repayment plans as of June 2016.  This is nearly a 40% increase from the previous year; on top of that, this is up 110% from two years ago.  Income-driven repayment plans include income-based repayment, Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE) payment plans.

It is clear that the income-driven repayment option for student loans is gaining popularity.  Another plan has gained some momentum as well: the Public Service Loan Forgiveness program. Since the Department of Education revised its eligibility assessment process, nearly one million applications have been approved.  Of those applications, about two thirds have received approval.

A promising trend about default and delinquency rates accompanies the data involving the student loan forgiveness programs and payment plans.  Long story short, both delinquency and default rates are declining as of the updated report in 2016.  Out of roughly 250,000 borrowers in repayment, only 1.7% entered default as opposed to 2.1% the previous year.  Additionally, the number of borrowers in delinquency decreased by 2.4% from the previous year (21% to 18.6%).

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These trends are supported by a reported $14 billion in recovered defaulted loans.  This shows that some defaulted loans are being paid eventually, but this number most likely does not outpace the new default rate.

There are other interesting finds that deserve a mention with these new statistics.  Free Application for Federal Student Aid (FAFSA) submissions have decreased each consecutive year since the recession in 2007.  This year saw a 3.5% decrease in total FAFSA submissions.  This decline may have something to do with the trends mentioned above, but it is also correlated with unemployment rate historically.

While this trend is attributed to the unemployment rate, there could be another explanation given the increase in private student debt since the recession. The logic here would attribute the decline in FAFSA applications to an increase in origination from banks that offer student loans. Keep in mind that the data presented in this article does not prove that hypothesis.

These trends are positive in the sense that the situation is improving. Though there are improvements, there is plenty more that needs to happen before the entire situation can be considered out of crisis mode.