Bad News: Americans Can’t Afford Their Student Loan Payments

Bad News: Americans Can’t Afford Their Student Loan Payments

Roughly a third of survey participants said that if payments were to resume on October 1, more than a quarter of their income will go toward student loan repayment.  

Here's What You Need to Remember: Biden has expressed support in forgiving up to $10,000 per federal student loan borrower, but several congressional Democrats argue that the amount isn’t enough, as they push for $50,000 in student loan forgiveness for each borrower.

The majority of federal student loan borrowers are not prepared to resume payments starting October 1, according to a new poll.

The survey, conducted by the advocacy group called Student Debt Crisis, found that 90 percent of participants aren’t ready to start making payments on federal student loans in October. The results also indicated that 65 percent of respondents said they’re not prepared to resume payments until September 2022 or are unsure when they’ll be ready.

The poll also uncovered that eight in ten respondents said they currently depend on the pandemic relief to help repay their federal student loans, while 75 percent of borrowers said that the current pause on payments is critical to their “financial wellbeing.” 

Roughly a third of survey participants said that if payments were to resume on October 1, more than a quarter of their income will go toward student loan repayment.  

“Even with an economic recovery picking up steam, many Americans still shoulder the economic harm caused by the pandemic,” Natalia Abrams, executive director of Student Debt Crisis, said in a statement. “We urge the Biden administration to extend the pause on payments and interest for federal student loans to give Americans a chance to land on their feet as the health crisis subsides and the economic recovery grows.”

So far, President Joe Biden has canceled nearly $3 billion worth of student loans since being in the White House, though it is unclear whether he will implement a widespread student loan cancellation measure. Biden has expressed support in forgiving up to $10,000 per federal student loan borrower, but several congressional Democrats argue that the amount isn’t enough, as they push for $50,000 in student loan forgiveness for each borrower.

Former President Donald Trump first applied a pause on federal student loan payments when the Cares Act passed in March 2020, where he extended the pause through the end of September 2020 and temporarily put interest rates on the loans to zero percent. Trump then extended the relief through the end of January 2021, a measure that Biden prolonged after taking office. Now, federal student loan borrowers will not have to make payments until October 1. 

The survey also found that there are major racial disparities relating to student loans, as Black, Latinx and Native borrowers “faced large economic obstacles during the pandemic and are least likely to say they are ready to resume payments on their federal student loans.” 

The Student Debt Crisis poll was conducted from June 17 to June 22 through a forty-six-question online survey sent out by email to 23,845 of the group’s followers.

Rachel Bucchino is a reporter at the National Interest. Her work has appeared in The Washington Post, U.S. News & World Report and The Hill. This article first appeared earlier this year.

Image: Reuters