Colorado residents during the pandemic have been catching up on their student loan debts.
Tens of thousands who were behind on making their payments caught up, leading to a 36% decline in delinquency rates in the state — among the biggest gains around the nation, according to a Lending Tree analysis of credit bureau and federal government loan data. Lending Tree is an online loan company.
In February 2020, 14% of Colorado residents who had student loans were deemed delinquent, defined as being 60 days or more behind on payments or being in default. In October, that share had fallen to 9% of loan holders. That drop translated to a 36% decrease in the number of people who had delinquent loans.
It fits into a national trend with 33% overall national improvement on student loan delinquency rates, the study found.
“Student loans are a major source of debt in this country, and when people are able to catch up on it their credit score improves,” said Nick VinZant, the senior analyst who conducted the study.
“Improving your credit is one of the best things you can do financially. Not only does it catch you up on your loan, but it also improves your overall financial situation,” he said.
Colorado ranked 9th in reducing student loan delinquencies, behind Nebraska (50%), Alabama (40%), Missouri (39%), Connecticut, Maine, Wisconsin, Arkansas, Delaware (all 38%).
Students around the United States have taken out loans worth $1.7 trillion as they try to finance higher education, federal education data shows. Roughly 43 million Americans have incurred student loan debts.
In Colorado, an estimated 800,000 residents owe an estimated $28 billion in student loan debts, state records show. The number delinquent decreased from 112,000 in February to 72,000 in October, the study found — meaning 40,000 residents were able to catch up.
It’s unclear why residents were able to do this. Possible explanations, analysts said, include pauses in repayment requirements during the pandemic. Pandemic stimulus payments also allowed families to address debt in some cases, and opportunities during lockdowns to shore up finances also may explain the decreased delinquencies, VinZant said.
“This is huge. Student loan debt has been a problem for many families that prevents them from buying houses in some cases and investing for the future.”