CFPB’s Report On Student Loans Origination Shows Downward Trend

The latest data released by the Consumer Finance Protection Bureau in the CFPB’s report on student loans origination, indicated this type of loan continues its downward trend during 2018.

In a series of interactive graphics posted on its website, the bureau shows both the number of student loans and the amount of loans declining slightly in 2018. The trend has been downward since the 2010-11 school year, when the country was beginning to emerge from the great recession.

Though the actual figures available are only through June 2018, the CFPB projected the decline to continue through the fall, when August always is the peak of student loan originations.

Student Loan Origination and Volume 2018

The CFPB graphics present strictly raw data, with no analysis or adjustments for inflation. But in comparing the latest months available, the number of new student loans dropped dramatically from 2012 to 2013 and had continued the downward trend since that time.

At the height of the recession in 2009, the seasonally adjusted number of student loans originated in June was 2,113,868. By 2013, the seasonally adjusted number of loans originating in June had fallen to 1,371,548. By June 2018, the seasonally adjusted number of loans fell to 1,112,039. Those numbers project out to 25.4 million student loans in 2009, 16.5 million in 2013 and 13.3 million in 2018

The seasonally adjusted volume of student loans fluctuates more in the raw data but also is not adjusted for inflation. In June 2009 the seasonally adjusted volume was $10.15 billion, jumping to $14.59 billion in 2012, plummeting to $9.27 billion in 2013 and sitting at $11.10 billion in June 2018.

A separate study titled “Trends in Student Aid 2018” released by the College Board showed total student and parent borrowing was $105.5 billion in 2017-18, compared to $127.7 billion (in 2017 dollars) in 2010-11. The College Board assessment finds undergraduate borrowing continues to decrease from the 2012-13 peak, but graduate student borrowing has begun to increase again over the past couple of years.

A year-over-year evaluation in the CFPB’s report on student loans origination shows the number of student loans also continues a downward trend that has held steady of the past four years, following a larger decline in 2014. The volume of borrowing however seemed to bump up a bit in 2015 and again in 2017, but has fallen again in 2018.

One anomaly in the CFPB’s report on student loans origination that is unexplained is a projected jump in student loan borrowing in December 2018. For instance, the projection for August 2018 is for total borrowing to be just $24.8 billion, down from $34.8 billion in August 2017. However, the projected total borrowing for December 2018 is $13.7 billion, up from $6.9 billion in December 2017. The 2017 ratio of August to December dollars are similar through the past decade, so it’s difficult to understand why the projection for 2018 is so different.

The projection for the number of loan originations for December 2018 was pegged at 684,688, compared to 479,832 in December 2017. That projects to an average new loan of $20,000 in 2018, compared to $14,380 in 2017, further adding to the mystery of the projection.

Geographical Student Borrowing Numbers

The CFPB also published a state-by-state graphic that shows wild fluctuation in student loan originations. The graphic compares July 2018 loan origination to July 2017, but there are no other months included nor seasonal adjustments that might explain the disparities.

The map shows 23 states with an increase in the number of student loan originations of 16 percent or greater. Twelve states show a decrease in originations of 16 percent or greater. Another 7 states increase between 6 percent and 15 percent while 4 show a decrease in that range. The remaining 5 states range between a 5 percent decrease and a 5 percent increase. The District of Columbia is included in the figures.

The greatest increase goes to Alaska at 195 percent, while the largest decrease was in South Dakota at minus 78 percent. The state closest to holding steady was Maryland at minus 1 percent, while Texas saw an increase of only 2 percent.

What the Student Loan Trends Mean

The College Board report notes that colleges and universities have been increasing grant aid to students during the past few years, which has helped reduce students’ reliance on loans to a small degree. One downward trend during that time is the amount of federal grants has declined.

With 17 percent of student loan borrowers in default on their loans and another 29 percent paying on their loans on an income-based payment schedule, a trend toward less reliance on student loans is welcome.

Studies abound on how the younger generation is delaying home buying and even having children because of their student debt.

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