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What Might Happen When Student Loan Forbearance Ends?

Rajashri Chakrabarti, Jessica Lu and Wilbert van der Klaauw

No 20220421a, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: Federal student loan relief was recently extended through August 31, 2022, marking the sixth extension during the pandemic. Such debt relief includes the suspension of student loan payments, a waiver of interest, and the stopping of collections activity on defaulted loans. The suspension of student loan payments was expected to help 41 million borrowers save an estimated $5 billion per month. This post is the first in a two-part series exploring the implications and distributional consequences of policies that aim to address the student debt burden. Here, we focus on the uneven consequences of student debt relief and its withdrawal. With the end-date of the student loan relief drawing near, a key question is whether and how the discontinuation of student debt relief might affect households. Moreover, will these effects vary by demographics?

Keywords: student loans; forbearance; CARES; delinquency; default; relief; debt (search for similar items in EconPapers)
JEL-codes: D14 Q12 (search for similar items in EconPapers)
Date: 2022-04-21
New Economics Papers: this item is included in nep-pke
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