[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-seo-584061-105":3,"detail-sidebar-cat-0-en-105":81,"doc-detail-584061-en":131},{"code":4,"msg":5,"data":6},0,"ok",{"site_id":7,"language":8,"slug":9,"title":10,"keywords":11,"description":12,"schema_data":13,"social_meta":74,"head_meta":76,"extra_data":78,"updated_unix":80},105,"en","how-the-student-loan-payment-pause-affected-borrowers-credit-access-and-credit-use","How the Student Loan Payment Pause Affected Borrowers’ Credit Access and Credit Use","","In March 2020, the U.S. paused federal student loan payments and interest accruals, covering about 90% of outstanding loans and roughly 38 million borrowers. The policy freed repayment borrowers’ monthly cash flow, converted certain loans to interest-free status, and produced gains in credit outcomes. The study analyzes federal student-loan holders’ credit-card limits and balances using data from the New York Fed Consumer Credit Panel via Equifax, focusing on derogatory-mark forgiveness that improved credit scores and expanded borrowing access.",{"@graph":14,"@context":73},[15,34,56],{"@type":16,"itemListElement":17},"BreadcrumbList",[18,23,27,31],{"item":19,"name":20,"@type":21,"position":22},"https://docshare.wps.com","Home","ListItem",1,{"item":24,"name":25,"@type":21,"position":26},"https://docshare.wps.com/document/","Document",2,{"item":28,"name":29,"@type":21,"position":30},"https://docshare.wps.com/document/research-report/","Research & 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","Person",{"url":19,"name":45,"@type":46},"DocShare","Organization","application/pdf","2026-11-02","2026-10-15",true,{"@type":52,"interactionType":53,"userInteractionCount":55},"InteractionCounter",{"@type":54},"ViewAction",11,{"@type":57,"mainEntity":58},"FAQPage",[59,65,69],{"name":60,"@type":61,"acceptedAnswer":62},"What changes did the student loan payment pause make for borrowers?","Question",{"text":63,"@type":64},"It paused federal student loan payments and interest accruals, placing about 90% of outstanding student loans into deferment and stopping interest from accruing during the period.","Answer",{"name":66,"@type":61,"acceptedAnswer":67},"How did the pause affect borrowers’ credit access and credit use?",{"text":68,"@type":64},"Borrowers with federal student loans showed differentially higher average credit card limits and balances over time, consistent with expanded credit access and increased use, especially when derogatory marks were forgiven.",{"name":70,"@type":61,"acceptedAnswer":71},"Why did the study focus on federal student loan holders and credit cards?",{"text":72,"@type":64},"The analysis includes only federal student loan holders because the pause did not affect private loans, and it emphasizes credit cards since they are linked to household expenditures that may change with increased cash flow.","https://schema.org",{"og:url":32,"og:type":75,"og:title":10,"og:site_name":45,"og:description":12},"article",{"robots":77,"canonical":32},"index,follow",{"doc_id":79,"site_id":7},584061,1792062223,{"code":4,"msg":82,"data":83},"success",[84,88,92,96,101,106,111,115,120,123,127],{"id":22,"doc_module":4,"doc_module_name":25,"category_name":85,"show_sort_weight":86,"slug":87},"Story & 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Perspectives | 25-1 | January 13 , 2025  \nHow the Student Loan Payment Pause Affected Borrowers’  \nCredit Access and Credit Use  \nDaniel H. Cooper and Maddie Haddix  \nIn March 2020, early in the COVID-19 pandemic, the Trump administration paused federal student loan payments and interest accruals as a temporary relief measure for borrowers. The pause covered roughly 90 percent of all outstanding student loans, affecting about 38 million individuals, who collectively held a balance of $1.5 trillion.1 At the outset, the duration of the pause was uncertain, but the policy would be extended multiple times through September 2023.  \nThe effects of this policy change were nontrivial. For each of the 17 million student loan borrowers in active repayment, the pause freed up $280 a month,2 on average, or about $13,500 per person over the entire 43-month period that the policy remained in effect. (In comparison, a childless individual with an adjusted gross income of less than $75,000 received a total of $3,200 from the three rounds of Economic Impact Payments in 2020 and early 2021 .) In addition, federal  \nstudent loans—even those held by the 21 million borrowers not in active repayment because their loans already were in deferment or forbearance—effectively were switched to interest-free loans during the pause, representing an additional, nontrivial benefit in the form of a lifetime wealth gain for borrowers. Our  \nThe views expressed herein are solely those of the authors and should not be reported as representing the views of the Federal Reserve Bank of Boston, the principals ofthe Board of Governors, or the Federal Reserve System.  \nconservative estimate suggests an average gain from this zero-interest period of about $9,350 per borrower, or $280 billion overall.  \nAnother important feature of the pause was the provision that offered large-scale forgiveness of derogatory marks (DM) against individuals who had previously defaulted on a student loan. While this change came without direct monetary implications, we show that it had a noticeable impact on borrower outcomes. In particular, wiping away these borrowers’ records of past payment troubles improved their credit scores (almost mechanically), providing them with expanded access to other forms of borrowing.3  \nWe examine how the pause affected federal student loan holders’ credit access and credit use—specifically their access to and use of credit cards. We do not include private student loan borrowers in our analysis because the pause did not affect their loans. Assessing the impact of the pause is important for understanding the efficacy of the policy change or of similar policies that could be considered during future periods of economic distress.4 To this end, we analyze student loan and other tradeline credit data from the Federal Reserve Bank of New York Consumer Credit Panel (CCP) provided by Equifax. We focus on credit cards partly because they are linked to household expenditures, which may have changed due to the increased cash flows from the pause. We don’t examine the direct link between the pause and consumer spending because that is beyond the scope of our data. However, we find evidence that, over time following the pause, federal student loan holders (referred to as SLHs hereafter) had differentially higher average credit card limits and higher average balances than individuals without student loans (non-SLHs), both of which are at least suggestive of increased spending by SLHs.5 We also show that these patterns appear to be driven by improved credit access among SLHs who had a student-loan-related DM on their credit records that was forgiven during the pause.6  \nAll Federal Student Loan Holders Benefited from the Pause  \nThe payment pause placed all federally owned student loans, or about 90 percent of all student loans, into deferment whereby no payments were required and no interest accrued. Roughly 17 million borrowers, or ","cbCaiq9AFs78bt3m","https://ap.wps.com/l/cbCaiq9AFs78bt3m","pdf",704174,"English","# Current Policy Perspectives\n## Policy effects on repayment and credit outcomes\n## Credit card access: limits and balances\n## Beneficiaries by loan status\n## Analytical focus and comparison approach","[{\"question\":\"What changes did the student loan payment pause make for borrowers?\",\"answer\":\"It paused federal student loan payments and interest accruals, placing about 90% of outstanding student loans into deferment and stopping interest from accruing during the period.\"},{\"question\":\"How did the pause affect borrowers’ credit access and credit use?\",\"answer\":\"Borrowers with federal student loans showed differentially higher average credit card limits and balances over time, consistent with expanded credit access and increased use, especially when derogatory marks were forgiven.\"},{\"question\":\"Why did the study focus on federal student loan holders and credit cards?\",\"answer\":\"The analysis includes only federal student loan holders because the pause did not affect private loans, and it emphasizes credit cards since they are linked to household expenditures that may change with increased cash flow.\"}]","How the Student Loan Payment Pause Affected Borrowers’ Credit Access and Credit Use | PDF",1792049648,23]