A new report from the Consumer Financial Protection Bureau suggested that as many as 20% of borrowers, nearly 6 million people, carry risk factors that could lead them to default on their loans when payments resume this fall. The Department of Education has announced that interest accumulation will begin in September, and payments will be due beginning in October.Student loan payments and interest accumulation have been paused since March 2020 due to the coronavirus pandemic.
The CFPB report identified a number of issues that could contribute to defaults, including that 2.5 million borrowers have struggled to make payments on other obligations, such as credit card bills and auto loans. The report said the number of delinquent payments has increased by 200,000 since September 2022 alone.
Beth Akers, an expert in higher education economics, told the Washington Examiner that while she expects a number of borrowers to have a difficult time paying back their loans, she isn't"generally worried" that it'll be a significant problem. Akers said the increase in debt taken on by borrowers during the pause could make it more difficult for some borrowers to make their monthly payments, but she added this was due to financial decisions made by borrowers. She also noted that defaults on federal student loans would not have a great impact on the economy.