Student loan payments return = consumer credit thunderstorm?
With student loan forbearance ended on some $1 trillion, banking executives will need to look deeper at consumers’ financial circumstances to ensure their institution avoids credit issues down the road.
About 27 million consumers will experience payment “shock” with the end of student loan forbearance.
But will that shock create widespread delinquencies and credit issues across consumer lending?
Data suggests ripples will run the gamut in ways that create pockets of high credit risk for lenders. Pressure on certain Baby Boomers from returning payments outpaces most Millennials, student loan borrowers who also utilize buy now, pay later (BNPL) could be increased credit risks flying under the radar, all while those who are delinquent on federal student loans go unreported to credit bureaus, according to analysis by The Financial Brand.
It’s a precarious place for the banking industry to be.
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