You can see that 9 million student loan borrowers have lower credit scores.
It is according to the new analysis of the New York Federal Reserve Bank.
According to an analysis of the Federal Reserve Bank of New York, about 9 million student loan borrowers can lose their credit scores and appear at the end of the large -scale loan.
The federal loan tolerance policy was first enacted by President Donald Trump in the first term in 2020 and continued by President Joe Biden until it was terminated on August 31, 2023. In essence, it was given a temporary suspension of repaying loans to individuals.
According to the New York Fed Analysis, the tolerance policy first improved the credit score to an average of 11, and the overdue was more jumped in the score.
“In 2020, the tolerance of all overdue loans (but unfortunate) has increased 74 points in the intermediate score between 2019 and 575. Since then, the score for previously overdue users has continued to increase, and the current score of the current borrower has been relatively flat.”
They said that by the end of 2024, the borrower, who had a delinquency or debt -free loan, scored 72 to 103 points higher than the end of 2019, but the group’s intermediate score is still in the subprime of less than 620.
Q1 2025 can increase overdue
However, the authors pointed out that the quarterly report in the first quarter of 2025 would increase the delinquency rate significantly, citing trends, the national credit report samples of the New York Fed Credit Panel (CCP).
“After the payment was resumed, the amount of federal loans in the past quickly returned to the full level of salary, reaching 15.6 %until the end of the lamp period, and more than $ 250 billion in overdue debt owned by 9.7 million borrowers,” Mangrum and Wang said.
They point out that some of these borrowers can miss the finals or go to the tolerance with the loan service manager, but the damage to the credit location will be damaged.
According to the analysis, “In view of these estimates, more than 9 million student loan borrowers are expected to decrease significantly in the first quarter of 2025.” The total impact on all credit access is different due to the reduction of credit scores. “
If missing payments occur mainly from people with low scores, the total impact is smaller. This is because people with low credit scores see a small reduction and have already limited credit access. However, if the prime and super prime borrowers with high credit scores fall back to the payment, the total decrease in the credit stand can be much greater.
The authors said, “This will reduce the credit limit, increase interest rates for new loans, and lower credit access.
