A quarterly review of refinanced student loan ABS performance indicates more prime borrowers are resuming payments after short forbearance periods following the coronavirus outbreak.
According to DBRS Morningstar, the third-quarter forbearance rate of the refinanced private student loans fell to 2.58% from the 8.36% average during the second quarter of the year – which is an approximate 70% decline.
The forbearance utilization rate of 3.26% in July fell for each of the succeeding months: 2.38% in August and 2.11% in July, reported DBRS Morningstar.
The refinanced loans tracked by the ratings involve graduate refi products issued by lenders that target high-earning, advanced-degree professionals: SoFi, CommonBond, Navient Corp.’s Earnest Operations subsidiary, KeyBank’s Laurel Road, and Southeast Bank’s Education Loan Finance.
The third quarter performance “continued the positive trend that commenced in June 2020,” the report issued Friday stated. “While the recent resurgence of coronavirus cases may result in a spike in forbearances during Q4 2020, DBRS Morningstar expects levels to improve over time as the economic recovery accelerates into 2021 and effective vaccines are introduced.”
The combined outstanding issuance from all lenders totals $32 billion across 77 transactions.
