The Consumer Bankers Association recently called on government agencies to adopt and implement best practices from the private student loan market after a report showed a marked difference between federal and private student loan delinquency rates.
MeasureOne recently released a report on the private student loan market, which suggested that as a result of sound underwriting by lenders, only three percent of private student loan borrowers are seriously delinquent on their payments.
November data from the Federal Reserve, however, showed that federal student loan delinquencies rose from 10.9 percent in the second quarter to reach 11.8 percent in the third quarter. Serious delinquencies are defined as 90 or more days with no payment.
Student loan delinquencies, according to the MeasureOne report, have risen steadily since the third quarter of 2008. As of the third quarter of 2012, overall delinquencies as a percentage of outstanding balances, total approximately 21 percent.
“With over $1 trillion in outstanding federal student loan debt, students — and the taxpayers who foot the bill — are done a great disservice when defaults occur,” CBA President and CEO Richard Hunt said. “The federal government, with leadership from the CFPB, should learn from the long-standing best practices the private student loan market has used to best serve our nation’s students.”