Student Loan Relief Changed Lives

A generation defined by debt got a chance to move ahead, but it’s not a permanent fix

The pandemic-era pause on student loan payments has been a financially transformative experience for many Americans, allowing them to pay down debt, improve their credit scores, and save for the first time. The forbearance period, which was extended multiple times by both the Trump and Biden administrations, was set to end on May 1, but the White House has pushed the date out again to Aug. 31. A look at the finances of those who’d been struggling under mountains of college debt helps explain why it’s so hard to end the freeze.

Since the government suspended payments on federal student loans in March 2020, the average credit score among borrowers rose to 668, from 640, according to an analysis by the California Policy Lab and the Student Loan Law Initiative. (Credit scores in the U.S. range from 300 to 850, and the change means the average score went from fair to what many lenders consider good credit.) Almost half of borrowers also reduced their use of credit cards during that time, by an average of 23%.

“It’s the first time in my life I’m feeling like an adult,” says Jennifer Nagle, a 38-year-old in Madison Heights, Mich., who graduated from college with more than $60,000 in student loans, two-thirds of it federal. “I have a savings account, and there’s money in it. After being a broke millennial for so long, that was astounding.” Before the pandemic she’d been paying about $600 a month on her federal loans and $200 toward her private ones, while her husband had $500 payments each month for his $85,000 in federal loans.