Why defaults in student loans could be about to skyrocket

While there is a new surge in COVID-19 cases nationwide, and the economy doesn’t seem to be close to recovering, most benefits given by the CARES Act are coming to an end. What happens to students who are struggling?

Student loan payment and interest suspensión are ending soon. The payment pause in the CARES Act for student loan borrowers will end in September, impacting as many as 45 million Americans who are in debt and probably won’t be ready to make payments by then.

Young people have been particularly impacted by the recession, with as many as 25% of people between the ages of 16 and 24 unemployed.  

“If borrowers are forced to resume repaying their student loans on Oct. 1st, delinquencies and defaults will skyrocket,” said Mark Kantrowitz, a higher education expert. “This year’s college graduates are entering the worst job market ever.”

Democrats in the House of Representatives want to extend the break for student loan borrowers until September 2021, but that doesn’t seem likely to happen. Some aid, however, may be possible.

“I do think there’s a good chance Congress will extend the waivers until the end of the year,” said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit that helps student loan borrowers with free advice and dispute resolution.

This issue is another of the important things that must be analyzed, as from this week, when a new stimulus package is debated by lawmakers.

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