Student Loan Pause Has Benefitted Affluent Borrowers the Most, Others May Struggle When Payments Resume

Since March of 2020, payments and interest accumulation on most federal student loans have been paused. This “payment pause” provided immediate relief to millions of households with student loan debt at a time of great economic uncertainty due to the pandemic. Some student loan borrowers have high incomes and never suffered wage losses due to the pandemic, and rising wages and low unemployment mean that many borrowers have recovered from any short-term financial effects of the pandemic. Other borrowers—particularly those who were struggling with student loan payments before the pandemic—will face significant financial hardship with the restart of payments. For borrowers who are likely to struggle, relief through the loan cancellation plan proposed by the Biden administration is by no means assured while a further extension of the payment pause appears unlikely given ongoing litigation.