The Unintended Consequences of Student Loan Forgiveness: The Lingering Burden of $35,000 Debt

The Supreme Court's decision to strike down President Biden's student loan forgiveness program has left millions of Americans facing the resumption of loan payments and the accrual of interest starting on September 1, 2023. A TransUnion study reveals that many borrowers have accumulated additional debt during the payment pause, with the average consumer already carrying $35,000 in student loan debt. As a result, consumers are expected to experience "payment shocks," with 50% of them facing monthly payments of over $200 and one in five facing payments of over $500. The study also found that borrowers have taken on additional credit products, such as bank card debt, auto loans, and mortgages, further increasing their financial burden. The Biden administration has announced a 12-month "on-ramp" to repayment to help financially vulnerable borrowers, but interest will begin to accrue immediately, making it advisable for consumers to resume payments as soon as possible.