Yahoo Autos Automakers Should Be Freaking Out About Student Loan Debt
Student loan borrowers demand President Biden use “Plan B” to cancel student debt Immediately at a rally outside of the Supreme Court of the United States on June 30, 2023 in Washington, DC.
It’s been a hell of a few years for American automakers; profits have been good, very good. Ford, General Motors, and Stellantis have made $250 billion since 2013, with another $32 billion on the way by the end of the year according to Economic Policy Institute. But there are dark clouds gathering for the Big 3 just beyond the smooth seas of profit; the student loan debt crisis.
I know the auto industry has an awful lot on their plates as it is, what with the expansion of the United Auto Workers strike and the uncertain futures of both EVs and self-driving vehicles, but still, the restart of student loans payments should have automakers freaking out.
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But the U.S. government froze payments and interest on federal student loans for the pandemic, an emergency measure that is now ending. Meanwhile, consumers bought vehicles at inflation-juiced prices. In June 2021, new- and used-vehicle inflation hit 20.4% and stayed elevated until late 2022.
Some cracks are now appearing in the auto loan market. Auto loan delinquencies climbed to 3.59% in August on a seasonally adjusted basis, their highest level since April 2010 shortly after the financial crisis, according to Moody’s Analytics.
This looming issue is not going to get better for auto makers now that those long-delayed student loan bills have come due. Between record price gouging/inflation, predatory rent hikes, two financial crisis and now the student loan crisis, there’s very little wiggle room for American’s Millennials and Gen Zers and they are already defaulting on their car loans in worrying numbers. In fact, folks from those generations are hitting delinquency rates not seen since the Great Recession, Automotive News reported over the summer.
