Somalia: ‘I sold the last three goats, they were likely to die’Read more Merck Foundation and African First Ladies marking World Cancer Day 2023 through 110 scholarships of Oncology Fellowships in 25 countriesRead more Supporting women leaders and aspirants to unleash their potentialRead more Fake medicines kill almost 500,000 sub-Saharan Africans a year: United Nations Office on Drugs and Crime (UNODC) reportRead more Climate crisis and migration: Greta Thunberg supports International Organization for Migration (IOM) over ‘life and death’ issueRead more United Nations (UN) Convenes Lake Chad Countries, Amid Growing Regional CrisisRead more 11 Disruptive Startups Selected for Cohort 3 of the Africa Startup Initiative Program (ASIP) Accelerator Program powered by Startupbootcamp AfricaRead more Africa Data Centres breaks ground on new Sameer facility in NairobiRead more Coffee with a human face: A union that improves livelihoods for Ugandan farmersRead more Trends Predicted to drive the retail industry in 2023Read more

Defaults loom as US student loan payments resume: Fed

show caption
Student loans make up the second-largest share of household debt burdens in the United States, leading groups and lawmakers to call on President Joe Biden to cancel some of it./AFP
Print Friendly and PDF

Mar 23, 2022 - 04:28 AM

WASHINGTON — Nearly 40 million Americans will begin making payments on their student loans when a pandemic debt forbearance expires in May, and a Federal Reserve study warned Tuesday of an increase in defaults.

Former president Donald Trump imposed a moratorium on repayments of some student loans when the Covid-19 pandemic began in March 2020, and his successor President Joe Biden extended it repeatedly, with its expiration now scheduled for May 1.

A study from the New York Fed found that about two-thirds of borrowers were able to benefit from the moratorium, but for the remaining one-third who had to continue making payments on student loans, defaults on other debt obligations increased.

Borrowers who will be affected by the May end of the moratorium “are likely to experience a meaningful rise in delinquencies, both for student loans and for other debt,” economists Jacob Goss, Daniel Mangrum and Joelle Scally wrote in a blog.

For those who had loans not covered by the pandemic forbearance, the authors found a 33 percent higher default rate on non-student and home loans than among those who did not have to worry about their student debt.

Biden has faced pressure to cancel part of the student debt outright, including from 85 elected officials from his Democratic party who sent him a letter urging him to do so in January.

According to a June 2021 report from the Fed, the total amount of student loans in the United States is at $1.7 trillion, the second largest share of household debt behind loans for real estate.

MAORANDCITIES.COM uses both Facebook and Disqus comment systems to make it easier for you to contribute. We encourage all readers to share their views on our articles and blog posts. All comments should be relevant to the topic. By posting, you agree to our Privacy Policy. We are committed to maintaining a lively but civil forum for discussion, so we ask you to avoid personal attacks, name-calling, foul language or other inappropriate behavior. Please keep your comments relevant and respectful. By leaving the ‘Post to Facebook’ box selected – when using Facebook comment system – your comment will be published to your Facebook profile in addition to the space below. If you encounter a comment that is abusive, click the “X” in the upper right corner of the Facebook comment box to report spam or abuse. You can also email us.