What happens to student borrowers after they finish or leave school and start paying down their federal loans? While many students look at, and many colleges promote, salaries of graduates, considering the student loan repayment rates of former students can provide a broader picture of financial wellness after attending a school.
College Scorecard, a U.S. Department of Education interactive website that helps students make informed decisions about their education options after high school, now provides prospective students with new information on how well students from particular schools are progressing in their federal loan repayment post-enrollment.
Student borrowers that finish or leave school can fall into many classifications of statuses beyond just being in good standing or paid in full. Specifically, College Scorecard now provides the frequency by which former student borrowers fall into the following categories two years after entering loan repayment on their federal loans:
- Paid in full: borrowers who have paid off all of their loans are in the paid in full status.
- Making progress on the original balance: outstanding loan balances can often increase due to interest, including capitalized interest upon entering repayment. Borrowers whose outstanding loan balances are lower than the original amount are categorized as making progress on the original balance.
- Not making progress on the original balance: borrowers whose outstanding balance is higher than the original amount borrowed are placed in the not making progress on the original balance category.
- Deferment: A deferment is a temporary postponement of payment on a loan that is allowed under certain conditions and during which interest generally does not accrue on certain types of subsidized loans. For example, borrowers can get deferments on loans if they go back to school for a higher degree or a certificate.
- Forbearance: borrowers are classified as in forbearance if monthly loan payments are temporarily stopped or reduced due to special circumstances like financial difficulties, medical expenses, change in employment, etc. For loans in forbearance, unpaid interest that accrues during the forbearance will be added to the principal balance (capitalized) of the loan(s), increasing the total amount owed.
- Delinquency: borrowers who are at least 30 days late on student loan repayments are classified as delinquent. Delinquency on a student loan payment for 90 days or more triggers loan servicers to report the delinquency to the three major national credit bureaus. In addition, if loans continue to be delinquent, they can risk going into default.
- Default: borrowers are categorized as in default when a payment isn’t made in more than 360 days. It can result in legal consequences and a loss of eligibility for additional federal student aid.
- Discharged: borrowers who have had loans discharged due to death, disability, school closure, or other extenuating circumstances.
For students who are about to make decisions about federal loan repayment, be sure to check out Federal Student Aid’s new Loan Simulator tool to find the plan that meet individual needs.
College Scorecard continues to improve as a free resource to prospective students to help them find the right college fit. For more information on these new features and to launch a college search today, visit collegescorecard.ed.gov.
Brian Fu and Brent Madoo
Office of the Chief Data Officer, OPEPD