The rate by which student loan debt grows has doubled since the Chinese coronavirus pandemic started, reaching record-high levels. Experian found that most of the new debt can be federal loan payment pause, a coronavirus relief measure that appears to have incentivized consumers not to pay off their existing debt while they borrow more money.
Experian has found that in the past year, the overall student loan balance has increased by 12 percent, which is double the growth rate from 2015 to 2019, when student loan debt was only increasing by about 6 percent per year, according to a report by CNBC.
The total U.S. outstanding student loan debt is now a record high $1.57 trillion, a $166 billion increase year over year.
The report added that most of the student loan debt can be attributed to the federal loan payment pause, a coronavirus relief measure that has since been extended until October 2021, and appears to have incentivized consumers not to pay off their existing debt while they continue to borrow more money.
Experian’s data shows that it is not necessarily true that students are borrowing record-high levels of money during the pandemic, but that they are continuing to take out more loans on top of the ones that they already have, which they are not paying.
“Borrowers are taking advantage of the paused repayment on their federal loans by not making any payments at all,” reports CNBC.
Given that most are currently not paying off their student loans, Experian data also found that balances for individual borrowers have grown to a record-high of $38,792, which is an increase of over $3,000 per borrower.
Meanwhile, student loan delinquency rates have decreased significantly, as student loan delinquency rates across all “days past due” (DPD) ranges have gone down by double-digit percentages.