The End of the Student Loan Repayment Moratorium

"College is an investment." It's a common line in dinner table conversations about higher education. The conventional wisdom is that college will set graduates on a trajectory where they are likely to earn far more than they would have otherwise. Indeed, research from the New York Fed suggests that recent college graduates on average earn substantially more — upward of $24,000 per year more — than workers in the same age group with only a high school degree. And this wage premium for college graduates only increases over time, as it goes from about 27 percent at age 25 to 60 percent by age 55, according to Harvard University economist David Deming. Clearly, there are substantial short- and long-term financial benefits to graduating from college. At the same time, while the price tag on higher education options can vary, the costs of attending college or graduate school have increased dramatically. As a result, student loans currently are the third-largest source of household debt, behind mortgages and car loans. Some 43.2 million Americans hold a total of $1.6 trillion in student loans — a figure nearly three times what it was around 15 years ago — with an average monthly payment of between $200 and $300. About 4.3 million of those borrowers live within the Fifth District. When economic activity ground to a halt with the onset of the COVID-19 pandemic in March 2020, those monthly payments became difficult for many borrowers to make. To ease the strain, the CARES Act — a massive economic stimulus package signed into law by President Trump that same month — contained a moratorium on the repayment of government-held student loans, as well as on interest accrual. Payments were originally paused until September of that year, but forbearance was extended repeatedly under the Trump and Biden administrations. The moratorium was finally lifted a little more than three years later, in June 2023, as part of the debt ceiling deal negotiated between the Biden administration and the Republican majority in the House of Representatives; payments and interest accrual resumed later that fall.