Cutting Off Student-Loan Relief in Sept. Will Have Consequences: Fed

  

Category:  News & Politics

Via:  texan1211  •  one month ago  •  21 comments

By:   Ayelet Sheffey (Business Insider)

Cutting Off Student-Loan Relief in Sept. Will Have Consequences: Fed
The NY Fed also found student-loan borrowers with other forms of debt, like credit card or mortgage, are likelier to miss those payments, as well.

S E E D E D   C O N T E N T



President Joe Biden. Chip Somodevilla/Getty Images

  • Biden recently extended the pause on student-loan payments through August 31.
  • The New York Fed found once that pause ends, borrowers say they expect a 16.1% chance of delinquency.
  • This is higher than pre-pandemic levels and is a sign of expected greater financial hardship.

Some student-loan borrowers don't feel too confident about staying current on payments if relief expires in September.

On Thursday, the New York Federal Reserve released a study analyzing what might happen when the pause on student-loan payments expires after August 31 — if President Biden doesn't extend it again or enact broad debt forgiveness. Using data from the May 2021 Survey of Consumer Expectations, which covers about 1,300 US households, the Fed found student-loan borrowers who participated in the pause on payments expect there's a 16.1% chance they will become delinquent, or fall behind on payments, if relief is cut off in September.

This finding is up from the pre-pandemic rate of 15.6%, and the report said there's a chance resuming payments could lead to delinquencies that "could reach or even surpass the pre-pandemic rate."

It added that "lower-income, less educated, non-white, female and middle-aged borrowers will struggle more in making minimum payments and in remaining current."

Biden recently extended the pause on student-loan payments for his fourth time in office as part of continued pandemic relief, and along with that extension, he announced a plan to restore over 7 million student-loan borrowers in default on their debt to good standing before they have to reenter repayment. This came after pressure from many Democratic lawmakers and advocates who were urging the president for more relief, and while the extension was welcome news, some Democrats were pushing for that relief to carry over through at least next year.

In addition to delinquency rates, the Fed also found that student-loan borrowers who received some type of relief on other forms of debt, like credit card and mortgage, during the pandemic have a higher likelihood of missing a payment once relief expires, compared to those who did not receive temporary relief because they "remain financially more vulnerable and expect a higher level of financial insecurity in the future."

Both Democrats and Republicans have expressed concerns with the student-loan relief Biden has implemented. While Republicans argued the continued extension of the pause on payments is unnecessary and costly to taxpayers, Democrats have sounded the alarm on restarting payments before borrowers are financially prepared. The Consumer Financial Protection Bureau also warned last week that 15 million student-loan borrowers could be facing "a difficult road" once payments resume.

While Biden himself has not commented on the potential for further relief, White House Press Secretary Jen Psaki said last week that Biden will "make a decision" about canceling student debt or extend the pause on payments once again before September rolls around.


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Texan1211
Professor Principal
1  seeder  Texan1211    one month ago

Okay, everyone who keeps touting how great the Biden economy is, please do explain why people are unable to pay their legal debts.

 
 
 
Texan1211
Professor Principal
2  seeder  Texan1211    one month ago

How are Democrats going to be able to spin a wonderful economy with people too destitute to pay their legal debts?

Pretty contradictory, and I bet the majority of American voters won't buy the bullshit.

 
 
 
Sean Treacy
Professor Expert
3  Sean Treacy    one month ago

How can anyone be asked to pay their student loan debt going forward, either?  With this example staring them in the face, why wouldn't an 18 year old borrow as much money as possible for as many years as possible, if he can expect it to be forgiven for the sake of fairness?  

But even further than Why not forgive all  mortgages? Or credit card card debt?  Just wipe out all debt, altogether.   Seems odd to limit it to a form of debt of which a majority is owed by people who either went to medical school or other  post graduate programs. 

 
 
 
Texan1211
Professor Principal
3.1  seeder  Texan1211  replied to  Sean Treacy @3    one month ago

I really got a kick out of the member of the Squad who proclaimed that forgiving student loan debt was "economic justice, gender justice, and racial justice" the other day!

 
 
 
Snuffy
Senior Guide
3.1.1  Snuffy  replied to  Texan1211 @3.1    one month ago
forgiving student loan debt was "economic justice, gender justice, and racial justice"

She keeps using that word.  I don't think she knows what it means.

 
 
 
squiggy
Sophomore Quiet
3.2  squiggy  replied to  Sean Treacy @3    one month ago
a majority is owed by people who either went to medical school or other  post graduate programs. 

You'll see the feedback when medical debt is cancelled.

 
 
 
Nerm_L
PhD Principal
4  Nerm_L    one month ago

Hold on a second.  This was included in dire warnings about delinquent STUDENT debt?

It added that "lower-income, less educated, non-white, female and middle-aged borrowers will struggle more in making minimum payments and in remaining current."

Now I'm really confused.  How is pausing student loans going to benefit 'lower-income, less educated, non-white, female, and middle-aged borrowers'?  It's amazing how many political buttons can be pushed in one sentence.  But it seems apparent the NY Fed is only throwing crap against the wall to see what sticks.  

Looks like the banks that made those student loans are going to have to 'eat their peas'.

 
 
 
Texan1211
Professor Principal
4.1  seeder  Texan1211  replied to  Nerm_L @4    one month ago
Looks like the banks that made those student loans are going to have to 'eat their peas'.

I believe it is us taxpayers who will be getting the bill.

 
 
 
Nerm_L
PhD Principal
4.1.1  Nerm_L  replied to  Texan1211 @4.1    one month ago
I believe it is us taxpayers who will be getting the bill.

Only if you are rich.  Wink, wink.

 
 
 
Drinker of the Wry
Freshman Expert
4.1.2  Drinker of the Wry  replied to  Nerm_L @4.1.1    one month ago

Didn’t Obama federalize the student loan program do the high interest rates paid down the ObamaCare costs?

 
 
 
Jasper2529
PhD Participates
5  Jasper2529    one month ago
Both Democrats and Republicans have expressed concerns with the student-loan relief Biden has implemented. While Republicans argued the continued extension of the pause on payments is unnecessary and costly to taxpayers, Democrats have sounded the alarm on restarting payments before borrowers are financially prepared. 

When, exactly, do Democrats think that these delinquent borrowers will be "financially prepared" to pay back 100% of their loans? 

 
 
 
Texan1211
Professor Principal
5.1  seeder  Texan1211  replied to  Jasper2529 @5    one month ago
When, exactly, do Democrats think that these delinquent borrowers will be "financially prepared" to pay back 100% of their loans?

The Squad wants all student loan debt wiped out.

For them, they think it is economic, racial, and gender "justice".

Have you heard of anything so idiotic? (besides whatever else the Squad talks about, of course)

 
 
 
Buzz of the Orient
Professor Principal
6  Buzz of the Orient    one month ago

I was curious about why liberals/Democrats are for student debt relief and conservatives/Republicans are not, and I think I found the answer.  It appears that Democrats tend to attract more votes from people with higher education levels than Republicans do, while the latter tend to attract more voters from lower education levels.  Dumbing down the electorate pays off for the Republicans. 

"The higher the education level, the more likely they are to vote Democratic."  (LINK) ->  

"25 years ago, Republicans were more educated than Democrats. Now it's the opposite, study says"  (LINK) ->

Even a small difference in percentages can translate to millions of votes..

 
 
 
Texan1211
Professor Principal
6.1  seeder  Texan1211  replied to  Buzz of the Orient @6    one month ago

Or maybe it is just as simple as wanting people to pay back money THEY borrowed instead of sticking the taxpayers with their bills.

I mean, many liberals keep touting how great the Biden economy is, so there really isn't a good reason to let people off the hook for debts they chose to incur.

Of course, maybe even some liberals are seeing the light, since not a one has a clue as to WHY we should forgive debts when the economy is going strong and unemployment is so low, as evidenced by how many times I have asked the question only to be met with silence.

 
 
 
Buzz of the Orient
Professor Principal
6.1.1  Buzz of the Orient  replied to  Texan1211 @6.1    one month ago

It's sad that education has to be so expensive when it should be as universal as public libraries and public parks.  Unfortunately that's the way it si in most of the world, but there are countries where university education is free. (LINK) -> .

My wife's daughter got her Bachelor's degree in logistics in Germany at Dortmund University, which is a fairly high standing university,and although the tuition was free, I still had to cover her dorm and food costs.  One would think that the number one economy in the world would be capable of covering university tuition when all those ones listed in the link I posted can do it.  However I can tell you that education is expensive in China, which is one of the reasons why many parents don't have more than one child even though the government permits it. 

 
 
 
Texan1211
Professor Principal
6.1.2  seeder  Texan1211  replied to  Buzz of the Orient @6.1.1    one month ago

Yes, education is expensive, but forgiving student loan debt does absolutely nothing to lower the costs.

 
 
 
Right Down the Center
Freshman Guide
8  Right Down the Center    one month ago

Is anyone really surprised that the kids not having to pay back student loans for a period of time would not find other ways to spend their money and go farther into debt?  They must have expected the loans to be forgiven and just continued to add to their debt in other areas.  It seems the government expected them to use the money they saved by not having to pay for student loans on things like food, rent and things like that until we were out of the pandemic.  It seems the kids had other ideas.  They will never be "financially prepared" until they learn to live within their means.

 
 
 
squiggy
Sophomore Quiet
9  squiggy    one month ago

"...compared to those who did not receive temporary relief because they "remain financially more vulnerable and expect a higher level of financial insecurity in the future.""

So, those who get free shit expect more free shit - they bank on it.

 
 
 
Right Down the Center
Freshman Guide
9.1  Right Down the Center  replied to  squiggy @9    one month ago

Did you notice that AOC and people like her want all student loans forgiven, not based on income?  I wonder if that is because if it was based on what people could afford to pay she would end up having to pay.  Just another example of liberals taking from the middle class to benefit themselves.

 
 
 
Texan1211
Professor Principal
9.1.1  seeder  Texan1211  replied to  Right Down the Center @9.1    one month ago

They know that young people hold unfavorable ratings for Biden, and maybe this is just a brazen attempt to buy their votes again, since so much of what they voted for Biden to do hasn't been accomplished.

Do Democrats believe people are too dumb to see what is going on here?

 
 
 
squiggy
Sophomore Quiet
9.1.2  squiggy  replied to  Texan1211 @9.1.1    one month ago

They do. Look at the likes of Pelosi - scam after scheme. They don’t hold a monopoly on crooked but they are expert players.

 
 

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