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MeasureOne Releases Comprehensive Analysis Of Private Student Loan Market

--Study shows private student loans performing significantly better than federal loans and continuing to show positive performance trends--

SAN FRANCISCO, Dec. 19, 2013 /PRNewswire/ -- MeasureOne, a specialized data company focused exclusively on student loan data, today released a comprehensive study of the private student loan market, revealing a smaller private sector student loan market and positive performance trends.

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The Private Student Loan Report - 2013 analyzed loan data from the nation's seven largest active private student lenders, a group that accounts for a significant percentage of all private student loans outstanding.  The group includes: Discover Bank; The First Marblehead Corporation; PNC Bank, N.A.; RBS Citizens, N.A.; Sallie Mae; SunTrust Banks, Inc.; and Wells Fargo Bank, N.A.  The Report shows that private student loans, which involve credit-based underwriting, a documented ability to repay, and a high percentage of cosigners, perform significantly better than federal loans and continue to show positive performance trends in terms of repayment, delinquencies and charge-offs.  The Report also indicates that the size and, therefore, the potential impact of the private loan market on overall student loan indebtedness is dwarfed by existing government programs.

Among the Report's conclusions:

  • The size of the private student loan market is smaller than has been previously reported.  The total outstanding debt reported by the seven largest active lenders is approximately $63 billion, which is less than 6 percent of the total student debt outstanding.
  • Over the past five years, federal loans outstanding have increased from nearly $600 billion in 2008 to more than $1 trillion in outstanding debt today.  During the same period, outstanding private loan balances have grown at a much slower pace and have basically leveled off since 2011.
  • The data shows that private student loans for the seven lenders in the study continue to show positive performance trends.  For example, private student loans with serious delinquencies (90+ days past due) peaked at the height of the recession in 2008-2009 and have steadily declined by 49 percent even as the percentage of loans in repayment has almost doubled.
  • As of the 3rd Quarter of 2012, only 3.89 percent of private student loans were seriously delinquent, measured as a percent of loans in repayment, and have further declined to 3 percent in the 3rd Quarter of 2013.  Although not an exact comparison, the Federal Reserve Bank of New York estimated that, as of the 3rd Quarter of 2012, 21 percent of all student loans, including private student loans, were seriously delinquent, also measured as a percent of loans in repayment.  Given the size of federal student loans outstanding, relative to private student loans, it is clear that federal student loan programs statistically account for the overall student loan delinquency rates reported by the Federal Reserve Bank of New York.
  • During the last four academic years, more than 90 percent of undergraduate and 75 percent of graduate private student loans included a cosigner.
  • School Certification has been universally adopted for private loans to undergraduate and graduate students.  This is an important protection against over-borrowing. 

"The rapid growth of the student loan market has been the focus of a great deal of media, political and regulatory attention," said Dan Feshbach, MeasureOne founder and chief executive officer.  "This report represents an important advancement in our understanding of the private loan segment of the market and the data shows the improving credit quality and repayment performance of the private student loans of the seven largest active lenders."

The full Private Student Loan Report - 2013 is available for download from the company's website at www.measureone.com.

About MeasureOne

MeasureOne, San Francisco, collects, analyzes, and distributes student loan data to provide insight into the nation's $1.1 trillion student loan debt.  The company developed the nation's largest private student loan data cooperative of contributed loan data from the seven largest private lenders, and the industry's only standardized database of more than 365 securitizations.  The company was founded by Dan Feshbach, who created the mortgage industry's largest cooperative databases, the LoanPerformance databases, which are now part of Corelogic, Inc.  For more information about MeasureOne, visit www.measureone.com.

SOURCE MeasureOne

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