NAVI Navient Corporation

Lenders wrote off an annualized 1.9% of undergraduate and graduate private student-loan balances in the third quarter, down from 2.4% a year prior, according to a new report Tuesday from data firm MeasureOne.

That is the first time this figure has fallen below the 2% mark since at least 2008, the farthest back MeasureOne tracks the data. Losses peaked at 10.1% in the third quarter of 2009.

The private student-loan industry has undergone a major turnaround since the recession, taking a starkly different route than the federal government by tightening lending standards. Almost every private student loan extended to undergraduates also requires a creditworthy parent or other adult cosigner, a process that leaves two borrowers on the hook and lessens chances of lenders writing off bad debts.

Missed payments are also hovering near record lows, a mark they hit earlier this year. Some 1.9% of outstanding private student-loan dollars were at least 90 days past due in the third quarter versus 2.3% a year prior. A peak of 6.1% came in the second quarter of 2009, according to MeasureOne's data, which is based on the six largest student-loan companies, including SLM Corp., or Sallie Mae, and Navient Corp.

Private student loans are a small piece of the student-loan market. Federal student-loan balances account for 92.5% of outstanding student-loan debt. Most of that has been extended without checking borrowers' credit scores. While default rates for federal student loans have been coming down in recent years, they remain high despite the low national unemployment rate.

Wall Street has been bullish on private student-loan companies since Election Day. Expectations of lighter regulation and an opportunity for private companies to play a bigger role in financing college debt has contributed to Sallie Mae's shares rising 53% since Donald Trump's victory. Shares of Navient, the largest student-loan servicer by balances, are up 24%.

Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com

(END) Dow Jones Newswires

December 13, 2016 08:25 ET (13:25 GMT)

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