Student-Loan Defaults Could Return to Pre-Pandemic Levels According to the St. Louis Fed

Americans with student loans are in for a fast-approaching wake-up call, according to a recent blog post by the Federal Reserve Bank of St. Louis. Student loan interest and payments are scheduled to resume after May 1. Therefore, serious delinquency rates for student debt could escalate from current historic lows amid the pandemic to previous highs in which 10% or more of the debt was past due. The blog also addresses how racial inequities continue to exist within the student loan space given that black students are disproportionality burdened with higher student debt. The central bank believes that simplifying the student loan repayment options in the long term may help borrowers and loan servicers alike.

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