Recovery of Defaulted Student Loans

The latest available data from the federal courts show that during October 2017 the federal government reported filing 41 new civil actions for recovery of defaulted student loans. (Veterans are excluded from these counts.) These actions typically involve use of Title 20 Section 1080 on student loan recovery, or Title 28 Section 1345 concerning the default of student loans.

When monthly 2017 civil filings of this type are compared with those of the same period in the previous year, their number was down (-40.6%). Civil suits for October 2017 are also lower than they were for the same period five years ago. Overall, the data show that civil filings of this type are down 70.3 percent from levels reported in October 2012. See Figure 1.

The comparisons of the number of new civil suits for recovery of defaulted student loans are based on case-by-case court records which were compiled and analyzed by the Transactional Records Access Clearinghouse (TRAC) at Syracuse University.

Figure 1. Recovery of Defaulted Student Loans (Excl. Veterans) Civil Filings Over the Last Five Years

Defaulted Student Loan Suits Down Sharply from 2011 Peak

The dramatic decline in federal government suits to recover defaulted student loans can be more readily seen in Figure 2 which graphs the annual number of such suits since the country's financial meltdown.

A record number of 4,335 suits were filed during FY 2011, and since that peak the number of these suits have steadily declined. Last year only 698 suits were filed, or an average of 58 per month. The figures for the first month of FY 2018 (October 2017) thus represent a decline even from last year's average numbers.

Figure 2. Recovery of Defaulted Student Loans (Excl. Veterans) Civil Filings over the last 10 years

Most Active Federal Judicial Districts

Understandably, there is great variation in the number of suits for the recovery of defaulted student loans in each of the nation's ninety-four federal judicial districts. The Central District of California (Los Angeles) led the nation last year with 137 suits, accounting for one out of every five in the nation.

Relative to population size, however, the Southern District of Florida (Miami) had the highest per capita rates - almost five times the national average. Central California was second, with over three times the national rate. In third place was New Jersey, which had more than double the number of suits than would be expected based upon the national rate.

Each month, TRAC offers a free report focused on one area of civil litigation in the U.S. district courts. In addition, subscribers to the TRACFed data service can generate custom reports by district, office, nature of suit or federal jurisdiction via the TRAC Data Interpreter.