A graduating student waits to cross the street in Cambridge, Massachusetts, U.S., on June 7, 2019. REUTERS/Brian Snyder/File photo

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March 22 (Reuters) – A spike in delinquencies last year among a smaller group of U.S. student loans not covered by a forbearance program put in place during the COVID-19 pandemic indicates potential trouble ahead. for nearly 37 million loans when that program ends, an analysis from the New York Federal Reserve showed Tuesday.

Borrowers covered by the forbearance program are not required to make payments on their loans beginning in March 2020, but the payment suspension will expire at the end of April.

Over the period, payments worth an estimated $195 billion have been foregone, the New York Fed said.

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Borrowers in a separate smaller group of about 10 million loans made privately or through the Federal Family Education Loan (FFEL) system and not covered by the forbearance program had trouble making their debt payments in the last two years. Notably, since March of last year, delinquency rates for FFEL borrowers have been on the rise, returning to pre-pandemic levels in late December.

By contrast, delinquency rates fell among borrowers covered by the two-year forbearance program to a low of 3.6% at the end of last year.

That bodes ill for those covered by the program who had higher debt balances, lower credit scores and were making less progress on payments than FFEL borrowers were before the pandemic began.

“As such, we believe that … borrowers are likely to experience a significant increase in delinquencies, both for student loans and other debt, once forbearance ends,” New York Fed economists wrote in a statement. blog post.

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Information from Lindsay Dunsmuir; Edited by Paul Simão

Our standards: The Thomson Reuters Trust Principles.