Americans’ $1.58 trillion of student loans is likely to come to the political forefront again, according to a Bloomberg News commentary. Since March 2020, the U.S. government has cut interest rates to 0% and suspended payments and collections on defaulted debt. For millions of Americans, it has been a tremendous relief. This emergency measure was supposed to expire on Sept. 30 but was ultimately extended until Jan. 31. Some Democrats, well aware of the political ramifications, are again calling to keep the freeze in place for longer, with Senate Majority Leader Chuck Schumer bemoaning that “horrendous interest will pile up at a time when too many are still not financially prepared to shoulder a giant monthly bill.” But with the U.S. economy in the midst of an outright boom, the arguments for “at least” one more extension are losing momentum. As unpopular as it may be, expect student-loan payments to resume soon, according to the commentary. Schumer’s reference point was a survey last month from the Student Debt Crisis Center, an advocacy group, and Savi, a startup that helps borrowers cut their payments. The top-line takeaway: “89% of full-time employed student loan borrowers say they’re not financially secure enough to begin making payments.” That sounds ominous, but it looks subject to selection bias: The survey was based on 33,703 responses from a group of about 2 million Student Debt Crisis Center followers. Broader economic indicators tell a more optimistic story. The student-loan burden disproportionately falls on 18- to 29-year-olds, according to Federal Reserve Bank of New York data. They have about $350 billion of the loans, or almost one-third of their overall debt. Those ages 30 to 39 have more in nominal terms, at about $510 billion, but that’s just 15.4% of their total debt because of a pickup in mortgages among that cohort.
