‘Trying to Understand’
Meanwhile, during the three-and-a-half years when they didn’t have to repay student loans, borrowers moved forward with their lives — and took on new debts like mortgages or auto loans, in a period that saw a surge in borrowing overall.
Student-Loan Borrowers Added Other Debts During Freeze |
The report finds that the expected increase in delinquencies “is likely manageable for the average lender’s portfolio.”
Still, it warns that the unique circumstances of the pandemic freeze is adding to uncertainty over consumer credit — and lenders who have a lot of student-debt-holders on their books will have to “act with urgency” to adjust loss forecasts and underwriting strategies.
“Even sophisticated clients view this as unprecedented,” said Ryan Curley, a managing director and partner at BCG. “They are trying to understand the implications.”
This article was provided by Bloomberg News.