Student Loan Loan Problems increased in the first quarter

Of Michael S. Derby

(Reuters)-American student loans borrowers had problems during the first quarter after the Government lifted a long-term moratorium on debt refund implemented during Covid-19 Pandemic, a report from New York Federal Reserve Bank stated on Tuesday.

As part of his quarterly review of household debt trends, the bank said that the total level credit that had fallen into delinquency increased to 4.2% of the outstanding loans, 3.6% of the fourth quarter last year, as part of a continuous return to pre-paid tendencies.

About 8% of student loans during the first three months of the year were 90 days or more criminals compared to 0.8% in the fourth quarter of 2024. In the meantime, most of the other loans problems were largely constant in the first quarter than at the end of 2024.

In a blog post, bank economists wrote that the increase in delinquency rates related to the return of required student loans payments is a return to the pre-paid tendency, and said that the ramifications of the situation are “serious”.

The increase in student loans crime was not a surprise, as the end of the 43 -month payment pause, which had caused a great decrease in trouble loans. A government ramp to return to payments was completed in October and from the first quarter, the bank said that problems with problems are concentrated in the southern states, and the largest borrowers who dominate the delinquent loans.

New York FED economists said that the student loan situation will lead to economic pain.

“Millions of borrowers have strong decreases in their credit position, which will increase debt costs or will seriously limit their credit access as mortgages and automobile loans,” said the bank’s post. “It is unclear if these penalties will be poured into other credit products.”

That said, New York FED researchers warned that there is uncertainty about how student loans will be played, as some borrowers may have been trapped by payments and can be resolved quickly. It could take several quarters to read clearly about the situation of student loan crime, they said.

The bank also pointed to a modest acceleration of mortgage debt, which resulted in severe crime during the first quarter compared to the previous period. But bank researchers said that they do not foresee any crisis on this front in the midst of bank loans and strong levels of capital levels in the domestic sector.

In a wider way, New York FED researchers consider that the general state of household balance sheet is in a fairly solid situation.

The first quarter data captured a period of increase in uncertainty and public mood, as the Commercial Rate Regime of President Donald Trump has searched for economic perspectives. During this period, economists increased their projections of recession, while a reacence in the pressures of inflation and increase in unemployment is expected. With the removal of the President on Monday from some of the most draconian rates of the Chinese imports economist, they have been returned in some of their most pessimistic forecasts.