Nearly 9 million student loan borrowers didn’t pay after bills restarted.
Following a three-year pause, payments on federal student debt officially began again in October, three months after President Joe Biden’s one-time forgiveness plan fell through. Yet 40% of the 22 million borrowers who had bills due did not make their payments by mid-November, according to the US Department of Education.
Student loan borrowers provide a window into the financial health of everyday Americans, who are grappling with higher housing costs, automobile debt and increased food bills that have strained household budgets.
For the millions of Americans with student loans, the past couple years have been a roller coaster. First, they thought Biden would provide relief, with a plan to forgive up to $20,000 in federal student loans per borrower. That was struck down by the Supreme Court leaving borrowers on the hook for their balances. Yet Biden’s administration also rolled out a one-year leniency program to help those struggling with their debt.
Under the plan — which started in October and ends Sept. 30, 2024 — borrowers who miss payments will not be considered delinquent, reported to credit bureaus or placed in default, although interest on the loans will still accrue.
There are signs that even fewer borrowers made payments in November. Each month, the Department of Education transfers the money received from student loan payments to the US Treasury. That amount dropped to $5.3 billion last month, down 25% from the almost $7 billion transferred in both September and October. Many borrowers threw money at their balances during those months to get ahead of the interest restart.
This article was provided by Bloomberg News.