WSJ Your Money Briefing Millions of People Aren’t Paying Their Student Loans. That’s Everyone’s Problem
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May 30, 2025 The return of student loan payments is creating a ripple effect in personal finances, with many borrowers falling behind and facing declining credit scores. This surge in delinquency could hinder consumer spending, posing a risk to the broader economy. The discussion highlights the struggles of diverse borrower demographics, challenging stereotypes and emphasizing their unique socioeconomic challenges. As individuals navigate this complex landscape, the need for flexible repayment options becomes increasingly pressing.
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Spike in Student Loan Delinquencies
- Delinquency on student loans surged from about 1% to 8% after payments resumed.
- This sharp rise shows many borrowers are struggling financially post-pandemic.
Loan Default Damages Credit
- Falling behind on loans hurts credit scores even for those previously with good credit.
- Worsened credit makes future borrowing more difficult for debtors.
Government Escalates Debt Collection
- The government is using wage and tax garnishments to collect overdue student loans.
- Changes in loan servicing complicate repayment and confuse some borrowers.