“After payments resumed, the volume of past due federal loans quickly returned to pre-pandemic levels and reached a new high of 15.6 percent by the end of the on-ramp period, with more than $250 billion in delinquent debt held by 9.7 million borrowers,” the report stated.
When the COVID-19-era pause on federal student loan payments ended in September 2023, the Biden administration introduced a 12-month “on-ramp” to help borrowers transition back to repayment. During this period, borrowers were protected from most penalties for missing payments, but this relief ended on September 30, 2024.
TRUMP’S SECOND TERM COULD UNDO BIDEN’S STUDENT LOAN FORGIVENESS
“It is reasonable to expect student loan delinquency to surpass pre-pandemic levels when new delinquencies hit credit reports,” the Fed’s report also said.
A student loan delinquency can cause a drop in a borrower’s credit score of over 150 points, resulting in “reduced credit limits, higher interest rates for new loans, and overall lower credit access.”
