(ConservativeHub.com) – Following a three-year student loan payment hiatus, a growing number of American borrowers have been filing for bankruptcy as they are unable to handle their student loan debt payments, according to Fox Business.
On Thursday, the Department of Justice noted in a new release that from November to September, there have been 632 borrowers who have had to file for bankruptcy in order to get rid of their student loan payments. This is a big increase when compared to the annual rate of 480 which was the average before the 2020 health emergency.
This is a particularly notable spike as there has been a payment freeze on federal student loans since March 2020. However, the pause ended in October which has put millions of Americans in a tough spot financially.
The average monthly bill ranges for each person but it is usually between $200 and $299. However, there are some borrowers who could have significantly higher payments according to the data of the Federal Reserve.
Borrowers were collectively called to start resuming their payments, which amount to roughly $10 billion each month, according to a JPMorgan analysis.
The Department of Justice noted in the release that they anticipate that this is a trend that will remain ongoing.
One year before the spike in bankruptcy filings, the Biden administration implemented a plan to make it easier for borrowers to use bankruptcy in order to get rid of their federal student loan debt.
The Justice and Education departments put out in November 2022 updated guidelines that were designed to allow those in the government to more easily identify whether it is needed for certain people to be discharged without the need for a lengthy investigation.
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