How the Pandemic-Related Recession Could Affect Student Debt

Homeownership is the largest source of wealth for most American families, and obtaining a safe, traditional 15-to-30-year mortgage is a key step toward achieving financial security. But outdated housing policies and financial regulations have made small mortgages—those for homes priced under $150,000—expensive for lenders and unavailable for millions of qualified and creditworthy borrowers, especially Black, Hispanic, and Indigenous households and those in rural communities. With limited access to small mortgages, many of these families turn to alternative financing arrangements, which often involve financial risks and lack many of the protections traditional mortgages offer.

The ongoing COVID-19 pandemic has had a major impact on the higher education system and on student borrowers. In these uncertain times, student loan trends, influenced by enrollment patterns, the labor market, the cost of school, and other factors, continue to shift.

Researchers from The Pew Charitable Trusts analyzed the student loan environment from multiple angles, drawing upon data and literature from past recessions and natural disasters to contextualize the situation facing student borrowers and to anticipate future changes and challenges in student borrowing. The materials collected here explore key factors that shape the COVID-era student loan landscape, including borrowing levels, delinquency and default rates, trends in higher education enrollment and financing, and families’ financial stability during economic downturns.