Student loan freeze boosted credit scores, study finds


Credit scores for student loan borrowers increased during the COVID-19 pandemic, according to the findings of a new study.

The “2022 Student Loan Update” was conducted by researchers from the Center for Microeconomic Data. 

Student protest student loans

Activists attend a rally outside the White House to call on U.S. President Joe Biden to cancel student debt. (Anna Moneymaker/Getty Images / Getty Images)

According to its findings, the credit scores of subprime borrowers – those with scores below 620 – dropped 8 percentage points to 28% of the total in 2021. The share of borrowers with scores of 660-719, meanwhile, increased 2.5 percentage points to nearly 25%. The share of “super-prime borrowers” – those with credit scores above 720 – increased by 5 percentage points to 34%. 

By the end of 2021, nearly 80% of student loan borrowers had higher credit scores, according to the study’s results. 

INFLATION AND RECESSION RISK MEAN BUY NOW, PAY LATER ISN’T GOING ANYWHERE: REPORT

The study suggested the shifting of percentages was likely due to borrowers taking advantage of the payment freeze and interest waiver to reduce balances during the COVID-19 pandemic. 

The Biden administration has extended the federal student loan payment freeze until Aug. 31. Forbearance was previously set to expire May 1. 

CLICK HERE TO GET THE FOX BUSINESS APP

The study drew upon the New York Fed Consumer Credit Panel (CCP), a nationally representative 5% sample of all U.S. adults with an Equifax credit report, which is comparable to FICO credit scores.  



Read More:Student loan freeze boosted credit scores, study finds

2022-08-10 00:24:31

Get real time updates directly on you device, subscribe now.

Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More

Get more stuff like this
in your inbox

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.

Thank you for subscribing.

Something went wrong.