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Who Is At Risk When Student Loan Payments Resume?

When the global COVID-19 pandemic began in March 2020, the U.S. Department of Education made the bold move to pause payments on eligible federal student loans while fixing interest rates at 0%. In the meantime, all collections activity on federal student loans was brought to a halt, which proved crucial as millions of Americans lost jobs and income due to the initial lockdowns caused by COVID-19.

This emergency deferment period was meant to be temporary, yet the federal government has extended it six times thus far. The current extension is slated to last through Dec. 31, 2022, although there’s always a chance that the deferment period may be extended again.

Either way, it’s pretty safe to say that payments on federal student loans will eventually resume, even if some loans are ultimately forgiven before that takes place. Unfortunately, this likely will adversely impact some people more than others, as we’ll explain below.

Key Takeaways

  • To help protect consumers from the financial effects of the COVID-19 pandemic, the U.S. Department of Education enacted emergency deferment of eligible federal student loans in March 2020. In addition to no payments being due, collections activity was halted and interest rates were fixed at 0%.
  • The deferment period is currently set to expire on Dec. 31, 2022. There’s a chance that the emergency action will be extended again, but nobody knows for sure quite yet.
  • When payments on student loans resume later this year or next year, those hurt worst likely will be Black and African American borrowers, women, and people who have student loans but no degree to show for it.

Which Groups Will the End of Deferment Hurt the Most?

When the pause on student loan payments and interest finally comes to an end, anyone with a higher-than-average debt burden will naturally have a greater financial challenge ahead of them than those with less college debt. As such, the following three groups are particularly at risk once the current student debt deferment period comes to an end:

Black and African American borrowers

According to a January 2022 poll conducted by CNBC and Momentive, 68% of surveyed U.S. adults have some form of debt, including student loans. One in four (24%) Black adults has federal student loans, compared to 15%, 14%, and 11% for Hispanic, White, and Asian Americans, respectively.

Not only are Black and African American borrowers more likely to have student loan debt, but they also owe more on average. According to the Board of Governors of the Federal Reserve System, Black borrowers took out the largest average amount of federal student loan money in 2019 at $44.88 thousand, compared to $40.17 thousand and $30.89 thousand for their White and Hispanic counterparts, respectively.


The CNBC and Momentive poll also found that women (19%) are more likely than men (11%) to have student loan debt in general, and this holds true across all surveyed racial and ethnic groups. The poll also notes that Black and Hispanic women are twice as likely as their male counterparts to have student loan debt after graduating.

The study also showed that six in 10 (62%) adults with federal student loans had struggled with their mental health as a result of this financial burden. However, women (65%) were more likely than men (54%) to experience a detrimental impact on their mental health due to their student debt load.

Borrowers who didn’t graduate

Finally, people who attended college but never graduated will likely face a significant financial challenge once student loan payments resume. After all, the financial benefits of attending college are felt more profoundly by those who have a degree to show for it. 

While it’s difficult to find exact figures for how many people borrow for college without graduating, recent data from the National Center for Education Statistics (NCES) shows that 59% of first-time, full-time college students earned a bachelor’s degree within six years of starting school at a public institution of higher education. Imagine how much student loan debt someone could earn within six years, then consider how difficult it would be to pay off without a college degree.

Bear in mind that there is also an income disparity among workers based on their educational attainment. Per figures from the U.S. Department of Labor, men with some college but no degree reported median weekly earnings of $1,027 in 2020, while women with some college but no degree earned $779 per week. Meanwhile, men with a bachelor’s degree earned $1,504 per week, whereas women with a bachelor’s degree earned $1,135 in weekly pay.

When Is Student Loan Deferment Going to End?

Currently, emergency relief for federal student loans is scheduled to expire on Dec. 31, 2022.

Will Student Loan Deferment Be Extended Again?

Nobody knows for sure if the pause on federal student loan payments and the fixed 0% interest rate will be extended again past Dec. 31, 2022.

Should You Make Student Loan Payments During Deferment?

You can make student loan payments during the deferment period if you wish to, but you should only do so if you can easily afford to. By making payments now, every penny that you pay will go directly to the principal of your balance. This can help you save money on interest later down the line, which can also help you speed up your repayment time line.

The Bottom Line

Payments eventually will resume for federal student loans, but not everyone will feel the impacts of this move equally. Black and African American borrowers, women, borrowers who didn’t graduate, and anyone already struggling with their finances are naturally going to have a harder time starting or getting back on track with their monthly student loan payments.

That said, there are some steps that borrowers can take if they’re worried about their loan payments resuming come Jan. 1, 2023 (or later if deferment is extended again). If you find yourself in this situation, you may want to consider working with your loan servicer to switch repayment plans so you can secure a more affordable monthly payment. You can even look into income-driven repayment plans, which let borrowers with low incomes pay as little as $0 toward their student loans each month.

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