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Borrowers covered under the forbearance program have not been
required to make payments on their loans since March 2020, but
the suspension of repayments is set to expire at the end of
April.
Over the period, an estimated $195 billion worth of payments
have been waived, the New York Fed said.
Borrowers in a separate smaller pool of about 10 million loans
provided privately or through the Federal Family Education Loan
(FFEL) system and not covered by the forbearance program
struggled with their debt payments over the past two years. In
particular, from March last year delinquency rates for FFEL
borrowers have been on the rise and returned to pre-pandemic
levels by the end of December.
That bodes ill for those covered by the program who had higher
debt balances, lower credit scores and were making less progress
on repayments than FFEL borrowers before the pandemic began.
"As such, we believe that ... borrowers are likely to experience
a meaningful rise in delinquencies, both for student loans and
for other debt, once forbearance ends," New York Fed economists
wrote in a blog post.
(Reporting by Lindsay Dunsmuir; Editing by Paul Simao)
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