Student loan freeze boosted credit scores, study finds
Nearly 80% of student loan borrowers had higher credit scores by the end of 2021, the study said
Vice President Harris announces the US Department of Education's plan to cancel all remaining federal student loans for borrowers who attended Corinthian Colleges
Vice President Harris announces the US Department of Education's plan to cancel all remaining federal student loans for borrowers who attended Corinthian Colleges.
Credit scores for student loan borrowers increased during the COVID-19 pandemic, according to the findings of a new study.
The "2022 Student Loan Update" was conducted by researchers from the Center for Microeconomic Data.
Activists attend a rally outside the White House to call on U.S. President Joe Biden to cancel student debt. (Anna Moneymaker/Getty Images / Getty Images)
According to its findings, the credit scores of subprime borrowers – those with scores below 620 – dropped 8 percentage points to 28% of the total in 2021. The share of borrowers with scores of 660-719, meanwhile, increased 2.5 percentage points to nearly 25%. The share of "super-prime borrowers" – those with credit scores above 720 – increased by 5 percentage points to 34%.
By the end of 2021, nearly 80% of student loan borrowers had higher credit scores, according to the study's results.
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The study suggested the shifting of percentages was likely due to borrowers taking advantage of the payment freeze and interest waiver to reduce balances during the COVID-19 pandemic.
The Biden administration has extended the federal student loan payment freeze until Aug. 31. Forbearance was previously set to expire May 1.
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The study drew upon the New York Fed Consumer Credit Panel (CCP), a nationally representative 5% sample of all U.S. adults with an Equifax credit report, which is comparable to FICO credit scores.