June 13, 2023
With federal student loan payments set to resume later this summer, millions of borrowers could struggle to make their payments as they come due again, according to a report from the Consumer Financial Protection Bureau.
By tracking credit records from a sample of borrowers, the bureau determined that about 20% of them, or nearly 6 million borrowers, have risk factors suggesting they could struggle when payments resume.
Ben Kaufman, the director of research and investigations at the Student Borrower Protection Center, told Inside Higher Ed that the bureau’s findings have “laid bare” that borrowers aren’t ready for the pause to be lifted. “The situation is worse than we could have imagined,” he said. “This is a four-alarm fire.”
Required payments on federal student loans have been on pause since 2020, but they are scheduled to resume either on Aug. 30 or 60 days after the Supreme Court rules on President Biden’s debt forgiveness plan — whichever comes first. Biden’s debt forgiveness proposal would provide borrowers some relief by eliminating up to $20,000 in debt for qualifying individuals, but the Supreme Court could decide to rule against his plan.