Resumption of federal student loan payments would jolt delinquencies, Fed says

Tens of millions of Americans haven’t had to make payments on their student loans the last two years — and a new study suggests many could struggle when bills come due again.Payments are scheduled to resume May 1 on federal direct student loans. President Biden is weighing whether to extend the moratorium on payments again, while lawmakers debate the possibility of cancelling some student debts altogether.

Borrowers coming off the moratorium now are “likely to experience a meaningful rise in delinquencies, both for student loans and for other debt, once forbearance ends,” researchers Jacob Goss, Daniel Mangrum and Joelle Scally wrote.As a general rule of thumb, Republicans on Capitol Hill oppose another extension of the payment moratorium, while Democrats support an extension, reduction or cancelation of loans.

The Education Department recently told student loan servicers to refrain from informing borrowers that their payments would soon resume,

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