The burden of student loan debt continues to weigh heavily on millions of Americans, as evidenced by the significant number of borrowers who have not resumed making payments after the pandemic-induced pause.
Following a three-year pause, payments on federal student debt officially resumed in October, Bloomberg reported Monday (Dec. 18).
However, approximately 40% of the 22 million borrowers who had bills due did not make their payments by mid-November, the report said, citing data from the Department of Education.
This number sheds light on the financial struggles faced by everyday Americans, per the report. These consumers are already grappling with rising housing costs, increased automobile debt and higher food bills.
After the Supreme Court struck down the Biden administration’s plans to forgive up to $20,000 in federal student loans for each borrower, the administration introduced a one-year leniency program to assist borrowers struggling with their student loan debt, according to the report.
Under this program, which began in October and will end on Sept. 30, 2024, borrowers who miss payments will not be considered delinquent, reported to credit bureaus or placed in default, the report said. However, interest on the loans will continue to accrue during this period.
There are signs that even fewer borrowers made payments in November, per the report. The Department of Education transfers the money received from student loan payments to the U.S. Treasury each month, and the amount dropped to $5.3 billion last month, a 25% decrease from the almost $7 billion transferred in both September and October.
This suggests that many of the borrowers made extra payments during those months to get ahead of the interest restart, according to the report.
PYMNTS Intelligence has found that about 1 in 4 members of the Generation Z, millennial and bridge millennial generations are more concerned about student loans than inflation.
Forty-three percent of consumers with loans who are worried about repayments believe their financial stability will suffer, 36% worry about paying monthly bills and 35% are concerned about affording everyday expenses, according to the “Consumer Inflation Sentiment Report: Back to School Means Back to Federal Loan Repayments.”
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