That’s how much household debt will have gone unpaid in the U.S. by the end of the first quarter because of various relief programs for borrowers afflicted by the pandemic, according to estimates in new academic research.
Between March and October of last year, an estimated $2 trillion worth of loans with 60 million people entered some kind of forbearance, either through the CARES Act or arrangements with private lenders, according to a team of researchers from Stanford University, Columbia University, Northwestern University, and the University of Southern California.
By October, those consumers had missed about $43 billion in debt payments because of that reprieve, and by the end of the first quarter, they’ll owe about $70 billion, the researchers estimated. Their analysis, published by the National Bureau of Economic Research in a working paper yet to be peer-reviewed, reflected household debt including mortgages, student loans, auto loans, and credit cards.
Forbearance—when a borrower is allowed to temporarily stop making payments—has substantially relieved pressure on households, the researchers said, especially given that the unemployment rate reached almost 15% at one point during the pandemic.
When forbearance on federal student loans will end is of particular interest this week. Right now, it expires Jan. 31, but President-elect Joe Biden has said an extension of the moratorium on payments and interest will be among his first actions upon taking office Wednesday. The U.S. Department of Education holds 92% of outstanding student loans.