BR100 Increased By (0.12%)
BR30 Increased By (0.28%)
KSE100 Increased By (0.26%)
KSE30 Increased By (0.26%)
AGHA 7.63 Increased By ▲ 0.04 (0.53%)
BECO 5.57 Increased By ▲ 0.06 (1.09%)
BML 59.74 Increased By ▲ 0.66 (1.12%)
BOP 34.40 Increased By ▲ 0.29 (0.85%)
CNERGY 13.11 Increased By ▲ 0.27 (2.1%)
CSIL 6.41 Increased By ▲ 0.31 (5.08%)
FCCL 58.06 Increased By ▲ 0.40 (0.69%)
FFL 16.23 Increased By ▲ 0.03 (0.19%)
FNEL 1.21 No Change ▼ 0.00 (0%)
KEL 7.43 Decreased By ▼ -0.05 (-0.67%)
KOSM 6.03 Increased By ▲ 0.09 (1.52%)
LOTCHEM 27.67 Decreased By ▼ -0.32 (-1.14%)
MLCF 102.75 Increased By ▲ 2.10 (2.09%)
NBP 205.06 Increased By ▲ 1.31 (0.64%)
NCPL 59.63 Decreased By ▼ -0.94 (-1.55%)
NPL 68.56 Decreased By ▼ -1.40 (-2%)
OGDC 318.92 Decreased By ▼ -1.37 (-0.43%)
PACE 11.05 Decreased By ▼ -0.05 (-0.45%)
PAEL 43.10 Decreased By ▼ -0.02 (-0.05%)
PIBTL 16.63 Increased By ▲ 0.07 (0.42%)
PPL 229.45 Increased By ▲ 0.61 (0.27%)
PRL 70.80 Decreased By ▼ -0.22 (-0.31%)
PTC 71.00 Decreased By ▼ -0.65 (-0.91%)
SSGC 27.41 Increased By ▲ 0.73 (2.74%)
TBL 10.31 Increased By ▲ 0.50 (5.1%)
TELE 8.53 Decreased By ▼ -0.08 (-0.93%)
TPL 23.06 Increased By ▲ 0.82 (3.69%)
TPLP 15.76 Increased By ▲ 0.65 (4.3%)
TREET 24.71 Increased By ▲ 0.58 (2.4%)
TRG 60.29 Increased By ▲ 0.45 (0.75%)
World

Defaults loom as US student loan payments resume: Fed

Published Updated
By

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.

Comments

Comments are closed for this article.