#Student_Loans - Twitter Hashtag

over 1 year ago

🇺🇸 Update on the US Student Debt Delinquency Situation Prev thread: https://t.co/xr71uCf7Cn Delinquency rates spiking up after collections start back up in May @WSJ article: https://t.co/OXQHAdvLpK #credit #student_loans

itscorrekt

@itscorrekt

over 1 year ago

Looking a little into the student debt delinquencies situation highlighted by @crypto_condom. Summary of the work by @AnnaEconomist 👇 helps to understand the issue of credit risk mispricing as well as the likely impacts of that on the US economy 🗓️ Chronology ============ ∘ March 2020: CARES Act suspends federal student loan payments and sets interest to 0%. ∘ 2020–2023: Multiple extensions under Trump and Biden administrations, with final pause ending September 2023. ∘ October 2023: Payments resume; interest accrual restarts. ∘ January 2024: Biden’s SAVE plan blocked by courts, leaving borrowers in forbearance. ∘ January 2025: Late payments reported to credit bureaus, triggering score declines. ∘ March–April 2025: New York Fed reports 9.7 million delinquent borrowers; credit scores drop by 87–171 points. ∘ May 5, 2025, the federal government will begin collecting on defaulted student loans for the first time since March 2020, when collections were paused due to the COVID-19 pandemic ∘ Projected late 2025: Defaults surge as loans >270 days overdue enter collections. The "Fresh Start" Program ===================== ∘ @AnnaEconomist tweeted back in Aug 2023 that the "Fresh Start" increased student loan borrowers by 50 points for their credit scores on average ∘ tweet: https://t.co/4U3h7Jwyem ∘ Discounting that credit score inflation, the credit risk on mortgages in Aug 2023 will be back at GFC levels back in 2008 Inflated Credit Scores ================= ∘ 1 year later in Oct 2024, she discounted the relative strength of subprime delinquencies in credit card/auto, pointing out that artificial bump in credit ratings caused by the effects student loan forbearance related policies from 2022-2023 "Student loans forbearance inflated/distorted credit scores, so subprime behavior is worse than the usual subprime, and near-prime is more like subprime." - Anna Wong The New York Fed Report - 2025 ========================= ∘ late payments reporting on student loans to credit bureaus resume January this year ∘ since the end of the loan relief period that ended in Oct 2023, many borrowers failed to resume payments, with delinquency rates doubling by end 2024 ∘ the New York Fed published 2 reports on the student loan delinquencies https://t.co/5GTuOEi8oR https://t.co/U9GoTPuNwI ∘ the report noted record-high delinquencies: 15.6% of federal student loans ($250+ billion) were overdue by late 2024, affecting 9.7 million borrowers ∘ this will result in severe credit score declines on the borrowers by the credit bureaus ∘ the projected defaults by mid-2025 will exceed over 9 million borrowers ∘ this default risk burden will potentially shift to US taxpayers ∘ Anna Wong commented last month that a higher proportion of students on forbearance took on new auto debt and that credit downgrades will disproportionately affect auto demand ∘ and autos demand is a key contributor to the PCE consumption number that measures 2/3 of all domestic spending in US households Forgone Spending and Other Impacts ============================ ∘ Anna and her colleagues modelled the expected reduction in spending on other goods from the credit score hit from student loan delinquency and showed a reduction across all income groups with big hits to auto and durable goods spending ∘ other economic impacts will include: → credit contagion - where credit risks in 1 part of the market starts spreading → labour market strain - financial stress could reduce workforce participation or force underemployment to meet repayment obligations → further pressure on the fiscal situation - taxpayer-funded loan defaults and expanded safety net costs may strain public budgets "I continue to think that even if Trump does nothing, the fading of these stealth fiscal impulse is going to be a big problem in the economy. Trump just accelerated the reckoning." - Anna Wong 🤔 All this just adds more uncertainty and headwind for the US economy into summer.

itscorrekt's tweet photo. Looking a little into the student debt delinquencies situation highlighted by @crypto_condom.

Summary of the work by @AnnaEconomist 👇 helps to understand the issue of credit risk mispricing as well as the likely impacts of that on the US economy

🗓️ Chronology
============
∘ March 2020: CARES Act suspends federal student loan payments and sets interest to 0%.
∘ 2020–2023: Multiple extensions under Trump and Biden administrations, with final pause ending September 2023.
∘ October 2023: Payments resume; interest accrual restarts.
∘ January 2024: Biden’s SAVE plan blocked by courts, leaving borrowers in forbearance.
∘ January 2025: Late payments reported to credit bureaus, triggering score declines.
∘ March–April 2025: New York Fed reports 9.7 million delinquent borrowers; credit scores drop by 87–171 points.
∘ May 5, 2025, the federal government will begin collecting on defaulted student loans for the first time since March 2020, when collections were paused due to the COVID-19 pandemic
∘ Projected late 2025: Defaults surge as loans >270 days overdue enter collections.

The "Fresh Start" Program
=====================
∘ @AnnaEconomist tweeted back in Aug 2023 that the "Fresh Start" increased student loan borrowers by 50 points for their credit scores on average
∘ tweet: https://t.co/4U3h7Jwyem

∘ Discounting that credit score inflation, the credit risk on mortgages in Aug 2023 will be back at GFC levels back in 2008

Inflated Credit Scores
=================
∘ 1 year later in Oct 2024, she discounted the relative strength of subprime delinquencies in credit card/auto, pointing out that artificial bump in credit ratings caused by the effects student loan forbearance related policies from 2022-2023

"Student loans forbearance inflated/distorted credit scores, so subprime behavior is worse than the usual subprime, and near-prime is more like subprime."
- Anna Wong

The New York Fed Report - 2025
=========================
∘ late payments reporting on student loans to credit bureaus resume January this year
∘ since the end of the loan relief period that ended in Oct 2023, many borrowers failed to resume payments, with delinquency rates doubling by end 2024
∘ the New York Fed published 2 reports on the student loan delinquencies

https://t.co/5GTuOEi8oR
https://t.co/U9GoTPuNwI

∘ the report noted record-high delinquencies: 15.6% of federal student loans ($250+ billion) were overdue by late 2024, affecting 9.7 million borrowers
∘ this will result in severe credit score declines on the borrowers by the credit bureaus
∘ the projected defaults by mid-2025 will exceed over 9 million borrowers
∘ this default risk burden will potentially shift to US taxpayers
∘ Anna Wong commented last month that a higher proportion of students on forbearance took on new auto debt and that credit downgrades will disproportionately affect auto demand
∘ and autos demand is a key contributor to the PCE consumption number that measures 2/3 of all domestic spending in US households

Forgone Spending and Other Impacts
============================

∘ Anna and her colleagues modelled the expected reduction in spending on other goods from the credit score hit from student loan delinquency and showed a reduction across all income groups with big hits to auto and durable goods spending
∘ other economic impacts will include:
→ credit contagion - where credit risks in 1 part of the market starts spreading
→ labour market strain - financial stress could reduce workforce participation or force underemployment to meet repayment obligations
→ further pressure on the fiscal situation - taxpayer-funded loan defaults and expanded safety net costs may strain public budgets

"I continue to think that even if Trump does nothing, the fading of these stealth fiscal impulse is going to be a big problem in the economy. Trump just accelerated the reckoning."
- Anna Wong

🤔 All this just adds more uncertainty and headwind for the US economy into summer.

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The Chris Salcedo Show

@CSalcedoShow

over 1 year ago

📣 New Podcast! "S11, Ep, 6: Judge Republicans On How They Defend Us From Democrats" on @Spreaker #abc #alien #biased #criminal #donald #fair #fake_news #free #gop #gov_ed #grooming #illegal #millennials #moran #president #press #student_loans #terry https://t.co/iE9ykZL9fp

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IrishLeprechan

@IrishLeprechan

about 2 years ago

@JoeyMannarinoUS @elonmusk & stone out minorities by killing filibuster! & SCOTUS already chastised current #Biden_HARRIS of #bypassing_Congress Using #deep_state_Agencies & #Executive_Orders & #Ignoring_SCOTUS like in #Student_Loans & #Weaponizing_DOJ_Lawfare against opposition & keeping off ballot &

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IrishLeprechan

@IrishLeprechan

over 2 years ago

@ReallyAmerican1 Biden let IRAN get nuclear weapons! Biden invited Putin in on #MINOR_INCURSION. #Dictator_Biden emptied #Strategic_Peteoleum_Reserve & ignored SCOTUS telling him to not forgive #Student_Loans and Harris #Congress job! Is this #X_ID #Liz_Cheney or parody?

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FREE SPEECH / CIVIL LIBERTIES REVIEW @LairdMWilcox

almost 7 years ago

#COLLEGE_DEGREES are incredibly expensive and often require #DEBT with #STUDENT_LOANS. The #COURSEWORK has been #DUMBED_DOWN, degrees are #TOO_COMMON and are #WORTH_LESS when job hunting. https://t.co/R5J4GIefAb

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