November 30, 2020

Experts: Student debt will affect other borrowing

By Olivia Heibeck

A report from the New York Federal Reserve said student debt has reached an all-time high of nearly $1 trillion.

The report also states the number of borrowers is approaching 40 million nationally and the average balance on their loans has risen to $25,000.

Seventeen percent of student borrowers are behind on their payments by three months or more.

In a CNBC article, senior economist for the New York Federal Reserve Donghoon Lee said delinquent student loan borrowers have a very difficult time accessing credit. Donghoon said the share of those borrowers is greater today than in the past.

Mark Kantrowitz,  publisher of the financial aid website, Finaid.com, said investors are increasingly concerned about the effect of student debt on household formation. Kantrowitz said he wondered if there was anything that could be done to thaw the marketplace.

This means it will be more difficult for student borrowers to build credit and apply for other loans.

In February, the Consumer Financial Protection Bureau searched for ways to provide financial relief for students who take loans.

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