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  • Frank Tian

Student Loan Update

*UPDATE*: Student loan pause extended again to 12/31.

Up to $10K student loan/$20K Pell Grant will be canceled.

43M borrowers will benefit, including 20M with debt reduced to $0.


~ the post below was written before the 8/24 announcement ~


👩‍🎓 Back to School, Back to Student Loan Payment


US student loan payments to resume in 1 week.

How much $ from this cash outlay? ⬇️


🟥 A Big Pile of Debt


As of Q2 ‘22, a student loan has grown to $1.6 trillion in the US.


Higher than car loans $1.5 trillion and credit cards $0.9 trillion.


🟦 The Pause of Repayments


Since Mar ‘20, the US government has paused student loan payments.


The pause has been extended several times by both Trump and Biden administrations.


🟩 Impact on Credit Score


The forbearances for student loans and other credit products, have suppressed consumer delinquencies and boosted credit scores.


New York Fed study: the score lift effect is more pronounced for student loan holders.


🟨 Resumed Cash Outlay


The Roosevelt Institute: on average each borrower needs to pay $̳3̳9̳3̳ per month.


The total payments on student loans will be $̳8̳5̳ ̳b̳i̳l̳l̳i̳o̳n̳ a year.


The cash outlay is expected to lower the overall credit score.


Consumer delinquency will continue to normalize.


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