U.S. Student Loan Crisis: A Dire Reality as Repayments Resume Post-Pandemic
The student loan crisis is looming large in the United States with recent data showing a significant number of federal borrowers failing to resume payments post-pandemic. Despite the U.S. Department of Education’s warnings about potential delinquency and defaults, it seems the reality is hitting harder than expected.
An Unsettling Reality
Reports indicate that only 60% of people with federal education loans made their due payments by mid-November. This lack of compliance is leading to a ballooning of the total student loan debt in the U.S., which has now surpassed $1.7 trillion. This figure is higher than both credit card and auto loan debt combined.
The Student Debt Strike
Activists like Astra Taylor of the Debt Collective describe the situation as a ‘massive student debt strike.’ The Debt Collective has even launched a petition for debt cancellation, which has garnered over 35,000 signatures. A significant 40% of borrowers have not made payments, indicating a widespread resistance against the crushing weight of student debt.
A System in Crisis
Persis Yu, from the Student Borrower Protection Center, suggests that both the loan system and borrowers were unprepared for resumption of repayments. This unpreparedness is compounded by overwhelmed servicers who are failing to assist borrowers effectively. The situation is further exacerbated by legal challenges to President Joe Biden’s plan to cancel up to $20,000 in student debt per borrower. The Supreme Court recently blocked this plan, leaving many borrowers in a state of financial hardship and uncertainty.
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