Americans with student loans are about to get a stark wake-up call on their borrowings as government relief programs phase out, according to a blog post by the Federal Reserve Bank of St. Louis.
While federal stimulus programs have kept many low-to-moderate income households afloat during the pandemic, most student-loan payments are scheduled to resume after May 1. That will usher in a transition period of consumer-debt relief in which defaults are poised to rise, the regional Fed bank said.
“Serious delinquency rates for student debt could snap back from historic lows to their previous highs in which 10% or more of the debt was past due,” Lowell Ricketts, a data scientist for the Institute for Economic Equity at the St. Louis Fed, said in the post.
