Who Is At Risk When Student Loan Payments Resume?

Particularly at risk: Black borrowers, women, and borrowers who didn’t graduate

When payments on federal student loans do eventually resume after years of extensions on a pause, some people will be more impacted than others—namely, Black borrowers, women, and people who didn't graduate from college.

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 collection 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 temporary measure has stretched on through multiple extensions, as a student loan forgiveness proposal has been challenged in federal courts. Payments are expected to begin 60 days after the block is lifted or after the program begins, or 60 days after June 30, 2023—whichever comes first.

Although some loans may ultimately be forgiven, those that aren't could pose extra hardship on groups that tend to have larger loans or less means to pay them back.

Key Takeaways

  • The U.S. Department of Education enacted emergency deferment of eligible federal student loans in March 2020 to help borrowers affected by the COVID-19 pandemic.
  • The federal government put a pause on payments and collection activity, and interest rates were fixed at 0%.
  • The deferment period was extended into 2023 after a court order blocked the student loan debt relief program from going through.
  • When payments on student loans resume, 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 Borrowers

According to a January 2022 poll conducted by CNBC and Momentive, 68% of adults surveyed in the U.S. 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 borrowers more likely to have student loan debt, but they also owe more on average. Board of Governors of the Federal Reserve System, Black borrowers took out the largest average amount of federal student loan money in 2019 at $44,880, compared to $40,170 and $30,890 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, data from the National Center for Education Statistics (NCES) shows that 38.6% of people with student loans didn't graduate six years after entering college. Imagine how much student loan debt someone could run up 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 $1,111 in 2022, while women with some college but no degree earned $847 per week. Meanwhile, men with a bachelor’s degree earned $1,632 per week, whereas women with a bachelor’s degree earned $1,248 in weekly pay.

When Is Student Loan Deferment Going to End?

Emergency relief for federal student loans is somewhat tied to the resolution of court challenges to the Biden administration's plan to implement its student loan debt relief program. In order to help borrowers, the federal government extended the forbearance period to either 60 days after the forgiveness program begins (or the court-ordered block is lifted) or 60 days after June 30, 2023—whichever comes first.

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 during deferment, 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.

Note that if you have been making payments during the deferment period and have paid off your student loan, you may be able to get some or all of those payments refunded if the student loan forgiveness plan goes through.

The Bottom Line

Payments eventually will resume for federal student loans, but not everyone will feel the impacts of this move equally. Black borrowers, women, borrowers who didn’t graduate, and anyone already struggling with their finances are 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. 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.

Article Sources
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