In the US, student reimbursement raises fears of default

In the US, student reimbursement raises fears of default

About 40 million Americans will resume student loan payments in May. At risk of seeing an increase in defaults on all loans, according to the Federal Reserve Board of New York.

The cost of studies in the United States is incomparably comparable to the cost of studying in France. In France, studying at the university is almost free: 170 euros a year for a bachelor’s degree, and 243 euros a year for a master’s degree. In school, it takes between 9,000 and 15,000 per year for a maximum of five years. On the other side of the Atlantic, for example, it takes $82,000 a year to study at Harvey Mudd College in California.

Also Read – Fifty American Universities Cost Over $60,000 annually

About 40 million Americans will start having to pay off their student loans next May, after a two-year hiatus, at risk of seeing an increase in defaults on all loans, according to a study by the Federal Reserve Bank of New York. These borrowers “You are likely to see a significant increase in defaults, both for student loans and other debt, once the moratorium is over.”confirmed, in this study published on Tuesday, Jacob Goss, Daniel Mangrom and Joel Scully economists at the New York branch of the US Central Bank (Federal Reserve, Federal Reserve).

Defaults on other loans are on the rise

Former President Donald Trump issued a moratorium on some student loan payments in March 2020, then Joe Biden extended it several times, until May 1, 2022. “Millions of people who have taken out student loans are still dealing with the impact of the pandemic and need more time before they can resume repayment.”The US President explained. About 80% of borrowers were able to take advantage of this deferment.

But for others who have had to keep paying their student loan maturities, defaults on other loans have doubled. The study authors note that the default rate on loans — other than students and real estate — is 33% higher among these borrowers than among those who didn’t have to worry about student debt. It is feared that these difficulties will be compounded with the scheduled resumption of payments to all borrowers.

Student loans total $1.7 trillion

Policymakers considered several proposals to ease the end of the moratorium., they point out. Some even want outright cancellation of at least part of their student debt, and 85 elected Democrats sent a letter to that effect to Joe Biden at the end of January.

According to a report by the Federal Reserve, dating back to June 2021, student loans in the United States now total $1.7 trillion, the second largest item of household debt after real estate.

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