The return of student loan payments could lead to borrowers not paying back debt as their expenses mount, according to Bank of America, MarketWatch.com reported. While consumers have been paying their debt back and delinquencies are “subdued for now,” they’re rising, the bank wrote in a note this week. A rising number of people have been more than 30 days late on their auto loans and credit-card debt, BofA noted, and the share of people who are seriously delinquent on loans, or more than 90 days late on their debt, has risen above pre-pandemic levels. If student loan payments resume in full, “we estimate that serious delinquencies could rise by about 67% over time,” BofA stated, “with risks of knock-on effects to other forms of household debt as well.” The Consumer Financial Protection Bureau estimated that more than 1 in 13 student loan debtors are currently behind on their other payment obligations. For borrowers, not paying back student loans would have serious implications for their overall finances: Missing a student loan payment could result in a big negative impact on their credit score. For a borrower who has a credit score between 350 to 850 — which is a large range — missing a student loan payment could cause their score to drop by 49 to 82 points on average, VantageScore estimated.
