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<v Speaker 1>Americans are struggling to repay their federal student loans. The

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<v Speaker 1>number in default has searched by millions in just the

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<v Speaker 1>last year, to take the total to more than nine

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<v Speaker 1>and a half million.

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<v Speaker 2>We have got to give some relief off of our

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<v Speaker 2>bags for these student loans.

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<v Speaker 3>It's ridiculous.

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<v Speaker 2>I can't afford my students can't afford then, But the

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<v Speaker 2>Department of Education thought, sending me an email saying the

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<v Speaker 2>save plan was ending, was going to suddenly make me

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<v Speaker 2>have fourteen hundred dollars a month to give them for

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<v Speaker 2>a student loan payment.

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<v Speaker 3>I am drowning in student debt. I have over forty

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<v Speaker 3>five thousand dollars in student debt.

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<v Speaker 1>Amy Salada is a senior advisor at protect boris, a

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<v Speaker 1>student debt advocacy group.

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<v Speaker 3>The number of defaults that was happening, it was like

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<v Speaker 3>one person every twenty six seconds, and now it's one

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<v Speaker 3>person every nine seconds.

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<v Speaker 1>So how did we get here? You've probably already heard

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<v Speaker 1>that going to college in the US is expensive, and

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<v Speaker 1>for many students that means borrowing from the government to

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<v Speaker 1>cover tuition and living costs. In fact, the average public

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<v Speaker 1>university student borrows thirty two thousand dollars to obtain a

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<v Speaker 1>bachelor's degree. After leaving college, they have to pay back

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<v Speaker 1>those loans, which sometimes takes decades. Let's just rewind a little.

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<v Speaker 1>During the COVID nineteen pandemic, the Trump administration passed federal

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<v Speaker 1>student loan payments as an emergency relief measure. It was

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<v Speaker 1>meant to last just a few months, but it turned

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<v Speaker 1>into more than three years, during which most boroughs didn't

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<v Speaker 1>have to make payments.

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<v Speaker 3>We're still going through the ramifications of that.

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<v Speaker 4>When student loan payments were completely paused.

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<v Speaker 1>Judith Scott Clayton is an economist at Columbia University and

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<v Speaker 1>an expert in student debt. When payments resumed, policymakers tried

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<v Speaker 1>to make the transition easier.

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<v Speaker 3>Under the Biden administration, there was something called the on

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<v Speaker 3>Ram period, where for a year, if you didn't pay

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<v Speaker 3>on your student loans, you didn't suffer some of the

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<v Speaker 3>negative consequences of non payment.

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<v Speaker 1>But those protections ended in September twenty twenty four. So

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<v Speaker 1>imagine being a borough who's made no student loan payments

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<v Speaker 1>in years and now suddenly has to find hundreds of

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<v Speaker 1>dollars every month. And there's another complication, courts blocked a

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<v Speaker 1>plan called Save that tight monthly payments to income. It

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<v Speaker 1>was there to help struggling borrows stay on track with

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<v Speaker 1>their loans. That court decision has led many looking for alternatives.

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<v Speaker 3>It was the most affordable payment plan that has a

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<v Speaker 3>very existent for student loan borrowers.

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<v Speaker 1>And experts say the alternatives could make repayment more challenging

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<v Speaker 1>for borrows across the income spectrum. The impact could be

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<v Speaker 1>felt most acutely by those who can least afford it.

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<v Speaker 4>They would have been able under previous plans to not

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<v Speaker 4>make any payment. Under the new plan, they have to

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<v Speaker 4>make at least a ten dollars payment every month. And

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<v Speaker 4>so my concern is that some folks could go into default,

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<v Speaker 4>you know, over one hundred and twenty dollars.

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<v Speaker 1>And here's another twist. Many of the Americans falling behind

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<v Speaker 1>on their student loans right now aren't even recent graduates.

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<v Speaker 1>Data from the Federal Reserve Bank of New York shows

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<v Speaker 1>that the people now defaulting on their student loans are

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<v Speaker 1>on average two and a half years older than those

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<v Speaker 1>defaulting before the pandemic.

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<v Speaker 3>Folks you know over sixty five are one of the

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<v Speaker 3>fastest growing demographics of student loan borrowers because in some

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<v Speaker 3>cases they've taken out loans for themselves that they haven't

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<v Speaker 3>been able to pay back fully, and then in many

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<v Speaker 3>cases they've taken out loans on behalf of their children

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<v Speaker 3>in their own names, and so you know they might

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<v Speaker 3>be hit with two bills.

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<v Speaker 1>Among geographically, borrows in Southern states such as Louisiana, Mississippi, Alabama, Georgia,

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<v Speaker 1>and South Carolina are disproportionately represented among new defaults.

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<v Speaker 3>We know that black women hold the greatest amount of

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<v Speaker 3>student debt because they have less generational wealth to kind

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<v Speaker 3>of pay up front on their educations.

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<v Speaker 4>Being aware of the huge racial disparities and student loan

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<v Speaker 4>repayment outcomes is something that I would be concerned about.

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<v Speaker 1>And there's another surprising detail. Most of the people now

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<v Speaker 1>defaulting on their student loans were not behind on their

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<v Speaker 1>repayments in twenty nineteen, So why are they struggling now?

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<v Speaker 3>This is like happening in a context of a lot

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<v Speaker 3>of other expenses going up for people. And so if

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<v Speaker 3>you have to make the choice between you know, paying

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<v Speaker 3>for medications in a month, they're paying for food for

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<v Speaker 3>your family, or paying your rent or paying on your

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<v Speaker 3>student loans. You know, I think most people are going

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<v Speaker 3>to choose that other payment that they could make in

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<v Speaker 3>order to kind of keep their family going.

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<v Speaker 1>For millions of borrows, the choice might not be between

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<v Speaker 1>paying and not paying, but between one bill and another.

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<v Speaker 1>So what happens when they simply can't keep.

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<v Speaker 3>Up, They, you know, start reporting that to credit bureaus,

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<v Speaker 3>which then, you know, affects your credit score and affects

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<v Speaker 3>your ability to do all sorts of other things.

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<v Speaker 4>That means it's going to be harder to get a

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<v Speaker 4>car loan, It's going to be harder to get a mortgage.

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<v Speaker 4>It could even be harder depending on where you live

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<v Speaker 4>and what the rules and regulations are. It could affect

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<v Speaker 4>housing applications for renting an apartment, and it.

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<v Speaker 1>Could get even worse.

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<v Speaker 3>The federal government has extraordinary collection powers. They can take

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<v Speaker 3>your tax refund, as you mentioned, they can garnish your

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<v Speaker 3>wages quick explanation.

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<v Speaker 1>Garnish means they can take money right from your paycheck,

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<v Speaker 1>and the US government can garnish up to fifteen percent

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<v Speaker 1>of a defaulted borrow's disposable pay fill minimum wage protections apply.

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<v Speaker 3>That that collection power has been turned off. For five

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<v Speaker 3>years since the pandemic. The Trump administration has delayed that,

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<v Speaker 3>but you know, I think advocates are expecting that any

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<v Speaker 3>day that could happen again.

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<v Speaker 4>It's not clear when that will restart, but that's just

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<v Speaker 4>sort of hanging over folks head as another element of

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<v Speaker 4>uncertainty here.

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<v Speaker 1>What would that look like in practice? Someone taking home

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<v Speaker 1>two thousand dollars after tax could lose up to three

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<v Speaker 1>hundred dollars a month from their paycheck. Well, borrows already

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<v Speaker 1>struggling to make ends meet a significant financial hit, So

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<v Speaker 1>when millions of Americans face the same problem at the

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<v Speaker 1>same time, a lot of people have been wondering, is

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<v Speaker 1>disa warning sign about the state of the wider economy.

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<v Speaker 4>I would take it as something that's independently of concern

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<v Speaker 4>and something to watch. But I think the large increase

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<v Speaker 4>is mostly an artifact of this strange period that we're

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<v Speaker 4>coming out of, and not necessarily an independent signal that

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<v Speaker 4>something is going terribly wrong with the economy. But you know,

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<v Speaker 4>it's kind of going into an economy where there's a

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<v Speaker 4>lot of other uncertainties going on.

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<v Speaker 1>For Amy Solada, the most urgent question right now is

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<v Speaker 1>what happens next.

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<v Speaker 3>The bare minimum would be no turning collections back on,

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<v Speaker 3>which is one of the most devastating you know, things

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<v Speaker 3>that could happen right now.

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<v Speaker 1>So experts don't see this as a warning sign for

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<v Speaker 1>the wider US economy, but for millions of borrows, the

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<v Speaker 1>consequences are very real. Damage credit scores, the threat of collections,

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<v Speaker 1>and hard choices between student loan repayments and other bills.

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<v Speaker 1>Years after the pandemic pause, its effects are still rippling

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<v Speaker 1>through the student loan system. For many borrows, the hardest

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<v Speaker 1>part may be happening right now.