Report: 300K Student Loan Borrowers Have Died Since Moratorium

Roughly 300,000 student loan borrowers have died since the federal government’s 2020 loan moratorium.

And according to a report Monday (Aug. 7) by Bloomberg News, that means the government will have to write off billions in those borrowers’ loans.

The report says experts argue that 300,000 figure could be halved once you factor in things that affect longevity, such as income, occupation and marital status. But even then, the government would stand to lose $5 billion.

As Bloomberg notes, death is one of the rare ways to get out of student loans. Payments are due to start back up again in October after being paused during the pandemic, a situation that’s already facing challenges due to technical issues and three fewer loan companies in play.

Earlier this summer,  the Consumer Financial Protection Bureau (CFPB) issued an alert that roughly 44% of federal student loan borrowers will have a new loan service company once repayments resume.

That’s because three loan service providers didn’t renew their contracts in 2021, amid the pandemic-related pause in loan repayments. The CFPB warns that borrowers who have loans shifted to new providers could face issues or errors like mistakes involving loan balances and interest rates, incorrect payment status in credit reports and changes to due dates.

Meanwhile, recent research by PYMNTS finds that some borrowers don’t plan to repay their loans, no matter who is collecting them. In the years since loans were last due many consumers have seen their financial lifestyle drastically altered by macroeconomic factors such as inflation, rising interest rates and widespread layoffs.

“Given these headwinds, some simply may not be able to afford to pay back their loans, and data shows that 7.6% do not believe they will pay them back — now or ever,” PYMNTS wrote last month, pointing data from the July “Consumer Inflation Sentiment” report.

And even though most consumers do intend to repay their loans, that report showed that 36% of student loan borrowers said they were worried about their ability to take on the additional payments while still handling their existing ones.

That means that some of the people refusing to pay back their loans are taking this path simply because they can’t add loan payments to their budget without being sunk financially. It could explain why more than 13% of consumers who earn less than $50,000 per year have no plans to pay back their student loans.