Many student loan borrowers likely face challenges when payments resume, consumer protection bureau warns

Higher Ed Dive

Jeremy Bauer-Wolf

June 8, 2023

Dive Brief:

• About 1 in 5 student loan borrowers could struggle to make monthly payments once they resume in August, as they have certain risk factors on their records, according to the U.S. Consumer Financial Protection Bureau.

• These risk factors include being delinquent on their student loans before the pandemic, or getting assistance to pay off those debts, the CFPB said in an online post Wednesday.

• As of March this year, the agency had identified 2.5 million student loan borrowers who were delinquent on other forms of debt, amounting to more than 1 in 13. This is 200,000 more delinquent borrowers than the CFPB found in its last analysis in September 2022.

Dive Insight:

Both the Trump and Biden administrations have extended the pandemic-era freeze on student loan repayments. But in recent months, Republicans criticized plans to continue the pause, particularly as COVID-19 restrictions waned.

Conservative lawmakers have also accused the current administration of botching the repayment rollout, saying executive officials have not been clear with loan servicers or borrowers about the timing and details of the transition.

The U.S. Department of Education had previously not set an exact date for payments to restart, but as a part of the debt ceiling deal House Speaker Kevin McCarthy struck with President Joe Biden this month, they will resume 60 days after the end of June, which is Aug. 29.

The CFPB report provides colleges and policymakers with a glimpse of the likely fallout of the payments starting back up. Borrowers haven’t needed to pay for about three years, portending a rocky restart.

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