The Center for Microeconomic Data’s latest update reveals that student loan borrowers’ credit scores increased during the pandemic and delinquency rates vary across the U.S.
08/12/2022 2:45 P.M.
2 minute read
The Center for Microeconomic Data released its 2022 Student Loan Update early last week, containing statistics that summarize who holds student loans along with balance characteristics.
The report is based on data from the New York Fed’s Consumer Credit Panel (CCP), a nationally representative 5% sample of all U.S. adults with an Equifax credit report.
Three key facts from the report:
- More borrowers are facing growing balances: “The share of borrowers with a declining balance reduced from 37.1% to 25.5%, fueled by a large transition to the flat or increasing [balance] category following the pandemic forbearance. However, 10.3% of borrowers moved from the flat or increasing category to the decreasing or no reported loan category (this category includes those whose loans were paid in full, forgiven, or charged off). This shift is likely due to borrowers taking advantage of the payment freeze and interest waiver to reduce balances during the pandemic.”
- Credit scores for student loan borrowers increased dramatically during the pandemic: “In total, 79.1% (30 million) borrowers saw increases to their credit scores during the pandemic, and 21.9% (8 million) increased their scores enough to migrate to a higher credit score group as defined here. This shifting of the credit score distribution is greater than for a similar period before the pandemic.”
- Student loan balances and delinquency rates vary widely across states, with worse outcomes in the South: “Median balances vary widely across states with Wyoming having the smallest median balance ($14,634) and Georgia having the largest ($21,965), although Puerto Rico has the lowest median balance of $12,645 and Washington, D.C., outpaces all states with a median balance of $26,530. Of the 10 states (not including D.C.) with the largest median balance, seven belong to the Southern Census region (Georgia, Maryland, Virginia, North Carolina, South Carolina, Alabama, and Tennessee).”
Outstanding student loan debt stood at $1.59 trillion in Q2 2022, roughly unchanged from Q1 2022, ACA recently reported.
In the update, New York Fed economists wrote that if the pandemic forbearance for federal student loans ends as scheduled on Aug. 31, 2022, they “expect a reduction in the share of student loan borrowers not making progress on their loans as payment requirements resume.”
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