Thus, we have longer series in the data covering 2009-2019 for loans originated near the start of that time period
Figure 4 is a further illustration of the phenomenon of non-repayment similar to Figure 2. In this case, years refer to the loan’s origination year (its vintage), and the horizontal axis tracks the years since that initial origination year. As we can see, the share of loans with a higher current balance than initial balance rises vintage-by-vintage. All the vintages show an initial increase within the first few years, likely reflecting high prevalence of deferment for younger loans. They then level off, until the year 2016, which is a kink point for all vintages (thus reflecting the same pattern as in Figure 2). After that year, every vintage includes more loans with a higher current balance than initial balance, despite the fact that each vintage is getting older. And, most importantly, this metric shifts up with each vintage, suggesting that non-repayment is getting worse both over time and across vintages.
The kink point in 2016 likely reflects the expansion of IDR programs toward the end of the Obama administration, with the creation of the REPAYE program and aggressive s as a solution to delinquency, as detailed in the aforementioned CBO report.
Figure 4 is essentially the mirror image of Figure 15 from the 2015 paper A crisis in student loans? How changes in the characteristics of borrowers and in the institutions they attended contributed to rising loan defaults by Adam Looney and Constantine Yannelis. Read more