Consumers leaving loan assistance sought at height of coronavirus crisis, including some in hard-hit areas

Most consumers have exited loan payment assistance they may have received early in the coronavirus crisis – and that includes some people who tended to live in communities hit hardest by the financial impact of the pandemic, according to a report Tuesday by the federal consumer financial protection agency.

The exception, according to the report, was assistance for student loans.

In a blog post, the Consumer Financial Protection Bureau (CFPB) said the total share of loans with payment assistance began declining last summer, as the initial increase in loans moving into assistance topped off and accounts started to ease away from aid in larger numbers. By March of this year, the report notes, auto loans and credit card accounts with assistance were only slightly above pre-pandemic levels.

Student loans, the agency noted, were the exception, primarily because the Coronavirus Aid, Relief, and Economic Security (CARES) Act put most student loans in automatic payment suspension. Mortgage loans (along with the student loans) with assistance remained significantly higher than pre-pandemic baselines, the agency said.

As for exiting assistance, the agency noted that last year it reported that majority Black census tracts, majority Hispanic census tracts, older borrowers, and borrowers in counties hit hardest by COVID cases and layoffs were most likely to receive assistance early in the pandemic. That pattern continued through March 2021, the agency reported.

Using mortgage borrowers as a reference point, the agency said it found that consumers in majority Hispanic census tracts were more likely to exit assistance, but consumers in majority Black census tracts were somewhat less likely to exit assistance than their counterparts in majority white census tracts.

“Mortgage borrowers in non-metro area census tracts, in counties with higher numbers of COVID-19 cases, and with higher unemployment rates were less likely to exit assistance,” the report states. “Meanwhile, consumers with higher credit scores and higher balances were both more likely to exit assistance when holding other factors constant, reflecting the likelihood that these consumers are well-off and consequently less affected by the COVID-19 income shocks.”

Trends in Reported Assistance on Consumers’ Credit Records