Student-Loan Borrowers Hit by Steep Drop in Credit Scores
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What are the consequences of resuming federal student loan payments?
This can have ripple effects throughout the economy. It puts things like homeownership at risk or getting a new car further out of reach for late payers. And so folks who are in this position told me that this just kind of felt like a nail in the coffin.
And for some U.S. companies, a strong dollar is kind of a nuisance. It's Thursday, February 27th. I'm Alex Ocelot for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today. President Trump has announced an additional 10% tariff on imports from China over its role in the fentanyl trade.
How does the strong dollar affect U.S. companies with global operations?
The move doubles up on the previous 10% of additional tariffs the president placed on Chinese products earlier this month. The new tariffs are set to go into effect on Tuesday. In a post today on his Truth Social platform, Trump also reinforced his threat to impose 25% tariffs on products from Canada and Mexico, a day after hinting that they could be delayed again. A spokesman at the Chinese embassy in Washington defended China's record in fighting drug trafficking. In U.S. markets today, stocks slipped after President Trump made fresh tariff threats, and investors remained unimpressed by NVIDIA's forecast beating results after yesterday's close. The Dow fell about half a percent, the S&P 500 dipped roughly 1.6 percent, and the Nasdaq dropped about 2.8 percent. President Trump said today that he expected any Ukraine-Russia peace deal would hold, but that his approach toward talks involving the Kremlin will be, quote, trust and verify.
Asked whether he believed Russian President Vladimir Putin would negotiate in good faith, Trump said that he has confidence that if there is a deal, it's going to hold. The remarks, made while sitting next to British Prime Minister Keir Starmer in the Oval Office, showcase the president's confidence in his own deal-making skills. At a press conference after the meeting with Starmer, Trump said he's working for a ceasefire in Ukraine.
The next step we're making is toward a very achievable ceasefire. We hope that that can happen quickly because thousands of young people, in this case, we're not talking about Americans, we're talking about Ukrainians and Russians are being killed every week.
Why have many student-loan borrowers not resumed their payments?
U.S. officials have said it is premature to decide on the American role in any peacekeeping force until an agreement to stop the fighting is reached. For people with federal student loans, the payment clock is ticking again. In October, pandemic-era relief on federal student loans ended, kicking off the 90-day window people have to make payments before their credit scores tick a hit. And it seems that many of them haven't. According to credit score provider VantageScore, about 43 percent of borrowers who owe payments haven't resumed making them. To talk more about the impact, I'm joined now by personal finance reporter Oyin Adedoyin. Oyin, why is this happening? Did millions of people just, like, forget that payments have restarted?
No, not exactly. One of the biggest things that borrowers who are experiencing this have told me is that they feel like they didn't receive sufficient communication from their student loan servicers. Student loan delinquencies are really interesting because, unlike credit card debt, student they don't really start to ping you or hit your credit report until 90 days late.
What are the broader economic impacts of student loan delinquencies?
So if you are 30 days late or 60 days late, you don't really hear anything. And at a time like this, when student loans have been paused for so long, people didn't realize that this on-ramp period ended in October. So now, you know, everyone from, you know, folks who are maybe freshly graduated from college to people who are in their 40s trying to get another house, are seeing this in their credit report and kind of freaking out.
What is the impact if you happen to be one of those among the 43% who has not made your payment yet?
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Chapters
5 chapters
1
What are the consequences of resuming federal student loan payments?
0:13–0:55
2
How does the strong dollar affect U.S. companies with global operations?
0:55–2:34
3
Why have many student-loan borrowers not resumed their payments?
2:34–3:38
4
What are the broader economic impacts of student loan delinquencies?
3:38–5:06
5
How does a drop in credit scores affect borrowers' financial futures?
5:06–11:14
Speakers
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