Following the resumption of student loan collections in early May, the Federal Reserve Bank of New York reported a five-year high in student loan delinquency rates. This information shows just how many Americans have fallen behind on their loan repayments during the pandemic-era pauses and relief efforts. With the end of many pandemic relief efforts and repayment pauses, delinquencies are beginning to appear on many Americans’ credit reports. Before the collections resumed, delinquency rates were appearing very low, so the spike was expected. In an article from Axios, researchers from the New York Fed shared insight into the spike, stating that “student loan delinquency has returned to the pre-pandemic ‘normal,’ with more than 10 percent of balances and roughly 6 million borrowers either past due or in default.” Individual Americans who are now experiencing delinquency may face severe economic consequences, including higher borrowing costs, limited access to credit for things... Read More » The post Student loan delinquencies see spike as credit reporting resumes appeared first on The Sader Law Firm.
Following the resumption of student loan collections in early May, the Federal Reserve Bank of New York reported a five-year high in student loan delinquency rates. This information shows just how many Americans have fallen behind on their loan repayments during the pandemic-era pauses and relief efforts.
With the end of many pandemic relief efforts and repayment pauses, delinquencies are beginning to appear on many Americans’ credit reports. Before the collections resumed, delinquency rates were appearing very low, so the spike was expected. In an article from Axios, researchers from the New York Fed shared insight into the spike, stating that “student loan delinquency has returned to the pre-pandemic ‘normal,’ with more than 10 percent of balances and roughly 6 million borrowers either past due or in default.”
Individual Americans who are now experiencing delinquency may face severe economic consequences, including higher borrowing costs, limited access to credit for things like mortgages and auto loans and declines in credit standing. However, the impact on the economy overall is predicted to be limited.
While delinquency rates are similar to those of 2020, the rates are slightly worse than pre-pandemic times when those not actually required to make payments are excluded. When looking at those who are required to make payments, nearly 24% of borrowers were behind on loan payments in the first quarter, compared to 22% in the first quarter of 2020. Many borrowers may be able to resolve their issues once they see the result on their credit report, but for now, the rates have surged to a high rate.
Understanding student loans and the newly implemented repayment plans can be daunting. With increased costs of living and other financial uncertainties, individuals may question their ability to make their repayments. The attorneys at Sader Law Firm are available to discuss how bankruptcy may be the right option for you. Contact us at (816) 561-1818 for a free phone consultation and learn more about what actions might work best for you.
The post Student loan delinquencies see spike as credit reporting resumes appeared first on The Sader Law Firm.
