Student Loan Default Recovery Continues to Drop in FY 2018

The latest available data from the federal courts show that civil suits filed to recover student loan debt are at their lowest levels in a decade. In fiscal year 2018, just 489 civil lawsuits were filed in federal courts, down from 698 in fiscal year 2017. FY 2018 continues a multi-year trend in decreasing civil suits of this type. These civil suits generally involve Title 20 Section 1080 on student loan recovery, or Title 28 Section 1345 concerning the default of student loans. Veterans are excluded from these counts.

Figure 1 shows the annual number of suits filed since the financial crisis of 2008. A record number of 4,335 suits were filed in fiscal year 2011. Subsequent years show a dramatic decline in suits, including FY 2018, which represented a 30 percent decline in suits over FY 2017.

Figure 1. Recovery of Defaulted Student Loans Civil Filings
FY 2008-2018
(Click for larger image)

The latest monthly data analyzed by the Transactional Records Access Clearinghouse (TRAC) shows that the number of suits filed in October 2018 is down 14 percent over the previous month, from 43 suits in September, to 37 in October. When monthly 2018 civil filings are compared with those of the same period in the previous year, their number was down (-13 percent). Civil filings for October 2018 are lower than they were for the same period five years ago. Overall, the data show that civil filings of this type are down 74.4 percent from levels reported in October 2013. See Figure 2 for monthly filings over the last five years.

Figure 2. Recovery of Defaulted Student Loans Civil Suits
FY 2008-2018 (Monthly Filings)
(Click for larger image)

The long-term trend in recovery of defaulted student loans civil filings for these matters going back ten years is shown more clearly in Figure 2. The vertical bars in Figure 2 represent the number of recovery of defaulted student loans civil filings of this type recorded each month. The superimposed line on the bars plots the six-month moving average so that natural fluctuations are smoothed out. One-year and five-year change comparisons are based upon the moving averages.

Top-Ranked Judicial Districts

There is great variation in the number of recovery of defaulted student loans civil filings in each of the nation's ninety-four federal judicial districts. The numbers of civil filings of this type filed in each federal district in a given month is typically small. The numbers below are the totals for FY 2018 in the top ten districts.

Table 1. Top Ten Districts, FY 2018
Judicial District Count Rank 1 year ago 5 years ago
Cal, C 97 1 1 1
Fla, S 62 2 3 2
Mich, E 37 3 10 4
Fla, M 23 4 5 5
Penn, W 20 5 13 -
Texas, S 19 6 7 7
Penn, E 17 7 2 11
Texas, N 17 8 4 48
Cal, N 13 9 11 6
S Car 11 10 - 29

The Central District of California (Los Angeles)- with 97 civil filings - was the most active during FY 2018, comprising nearly 20 percent of all civil filings seeking recovery of student loans nationwide in federal courts. The Central District of California was ranked 1st a year ago as well as five years ago, although the number of civil filings in the Central District have significantly dropped since 2013. The Central District has led the nation in these civil filings over a ten-year period, with a total of 4,875 filings from FY 2008 - FY 2018. FY 2013 represented a peak year for filings of this nature before a precipitous decline beginning in FY 2014.

Other districts around the US have also experienced significant drops in civil filings of this type in the past five or more years, typically after a period of growth in those filings in the first years of the Obama Administration. The sharp increases and steep falls in civil filings over the course of the Obama Administration are most stark in the Southern District of Texas, Eastern District of Michigan, and Central District of California. Florida's southern district and Illinois's northern district ranked 4th and 5th in overall filings from FY 2008 - FY 2018, but experienced gentler shifts in the number of civil filings from year to year. See Figure 3 below.

Figure 3. Filing Trends Five Most Active Districts Seeking Recovery of Defaulted Student Loans
FY 2008-2018
(Click for larger image)

Further, the Southern District of Florida had the highest per capita rates - almost six times the national average. Eastern Michigan was second, with four times the national rate. In third place was Western Pennsylvania, with nearly four times 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.