About 40 million Americans will resume student loan repayments in May. At the risk of seeing an increase in payment defaults on all loans, according to the New York Fed.
The cost of studies in the United States is incomparably comparable to that in France. In France, studying at university is almost free: €170 per year for a bachelor’s degree, €243 per year for a master’s degree. In school, it takes between 9,000 and 15,000 per year for a maximum of five years. On the other side of the Atlantic, for example, it takes $82,000 a year to study at Harvey Mudd College in California.
” READ ALSO – Fifty American universities cost more than 60,000 dollars per year
About 40 million Americans will start having to repay their student loans next May, after a two-year hiatus, at the risk of seeing an increase in defaults on all loans, according to a study by the New York Fed. These borrowers “are likely to experience a significant increase in defaults, both for student loans and other debt, once the moratorium expires”underline, in this study published on Tuesday, Jacob Goss, Daniel Mangrum and Joelle Scally, economists at the New York branch of the American central bank (Federal Reserve, Fed).
Defaults on other loans are on the rise
A pause on the repayments of certain student loans had been decreed in March 2020 by former President Donald Trump and then extended several times by Joe Biden, now until May 1, 2022. “Millions of people with student loans are still dealing with the impact of the pandemic and need more time before they can resume repayments”, explained the American president. About two-thirds of borrowers were able to benefit from this moratorium.
But, for the remaining third who have had to continue to repay student loan installments, defaults on other loans have multiplied. The authors of the study note a default rate on loans – other than students and real estate – 33% higher among these borrowers compared to those who did not have to worry about their student debt. And fear that with the scheduled resumption of payments for all borrowers, these difficulties will multiply.
Total amount of student loans reaches $1.7 trillion
“Policymakers considered several proposals to soften the end of the moratorium”, they point out. Some even want an outright cancellation of at least part of the student debt, and 85 elected Democrats had sent a letter to this effect to Joe Biden at the end of January.
According to a report from the Fed, dating from June 2021, the total amount of student loans in the United States has now reached 1.7 trillion dollars, the second largest item of household debt behind real estate.
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