Analyzing The Student Loan Debt

Comprehensive Insights on Student Loans and Breaking Down the Data

Note: This newsletter contains information for educational purposes only, and the content below should not be considered financial advice to readers. We published a brand new short recommendation for our clients. If you would like to become our client, email laks@unicusresearch.com

Americans are relying more on consumer credit than ever. However, the current scenario suggests that consumers are facing liquidity issues. The rise of Buy Now Pay Later (BNPL) also suggests that consumers are financially strained. On April 21, 2025, the US Department of Education (DOE) announced it will resume collections on defaulted loans starting Monday, May 5. Collections on these loans have been paused since March 2020.

Student Loan Collections - Our Analysis

Payments on student loans, which were on hold during the COVID-19 pandemic, resumed in October 2023. Previously, non-payment was scheduled to be reported to credit bureaus in October 2024, but this deadline was extended to May 2025. If the government begins to garnish wages, many consumers could find themselves in a liquidity crisis. Our objective is to identify a cross-section of consumers who may be particularly vulnerable to rising student loan payments.

First, we plan to determine the number of consumers at risk of defaulting. If the number is significant, it could have substantial economic repercussions. A student loan default will negatively impact a consumer's credit rating for seven years, making it more challenging to secure other government-backed loans, such as those by the Federal Housing Administration (FHA).