Student loan borrowers with higher credit scores during COVID-19

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Student loan borrowers with higher credit scores during COVID-19

Credit scores for student loan borrowers increased during the COVID-19 pandemic, according to the findings of a new study.

The 2022 Student Loan Update was conducted by researchers from the Center for Microeconomic Data.

The credit scores of subprime borrowers that had scores below 620 dropped 8 percentage points to 28% of the total in 2021, according to its findings. The share of borrowers with scores of 660 -- 719 increased by 2.5 percentage points to nearly 25%. The share of super-prime borrowers with credit scores above 720 increased by 5 percentage points to 34%.

Nearly 80% of student loan borrowers had higher credit scores by the end of 2021, according to the study's results.

The study showed that the shifting of percentages was likely due to borrowers taking advantage of the payment freeze and interest waiver to reduce balances during the COVID 19 epidemic.

The federal student loan payment freeze is extended until Aug. 31. The earlier date for forbearance was to expire on May 1.

The study drew on the New York Fed Consumer Credit Panel CCP a nationally representative 5% sample of all US adults with an Equifax credit report, which is comparable to FICO credit scores.