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‘Historically large’ hike in delinquencies and defaults
U.S. Department of Education Undersecretary James Kvaal said in a recent court filing that if the government isn’t allowed to provide debt relief, there could be a “historically large increase in the amount of federal student loan delinquency and defaults as a result of the COVID-19 pandemic.”
Despite student loan borrowers being offered forbearances during previous natural disasters, Kvaal wrote, default rates still skyrocketed when payments resumed.
The pandemic-era relief policy pausing federal student loan payments has been in effect since March 2020, and payments aren’t scheduled to resume until after the litigation over the president’s plan is resolved or at the end of August — whichever comes sooner.
″[T]he one-time student loan debt relief program was intended to avoid” skyrocketing default rates, Kvaal added.
The borrowers most in jeopardy of defaulting are…
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