In October 2023, the pause on federal student loan repayment implemented in 2020 during the COVID-19 pandemic ended, affecting roughly 43 million borrowers who owe a collective $1.63 trillion.
To find out how borrowers are coping with the continuation of student loan payments, including how many have missed payments and why, Intelligent.com surveyed 1,000 federal student loan borrowers in January 2024.
Key Findings:
- 6 in 10 student loan borrowers have missed payments since pause ended in October 2023; 25% haven’t made any payments
- 9% of borrowers who haven’t made any payments are intentionally boycotting to pressure government to cancel federal student loan debt
- 69% of borrowers who haven’t resumed repayment say they can’t afford it
- 18% of borrowers who haven’t resumed repayment plan to wait until September 2024, when they’ll start facing severe consequences for missing payments
- 94% of borrowers who have resumed student loan payments say it’s been financially challenging
1 in 10 borrowers skipping student loan payments are boycotting repayment
Since the federal student loan payment pause ended in October, only 40% of borrowers have made all their monthly student loan payments. Thirty-five percent have made some payments, and 25% haven’t made any payments.
Of the one-fourth of borrowers who haven’t made any payments, 9% say they are intentionally boycotting repayment as a way of pressuring the federal government to cancel federal student loan debt.
In an August 2023 survey conducted by Intelligent.com, 49% of borrowers said they were aware of calls for a student loan repayment boycott when the payment pause ended. At that time, 62% of borrowers who knew about the boycott movement said they were ‘highly likely’ (26%) or ‘somewhat likely’ (36%) to participate.
Among those currently boycotting student loan repayments, 44% believe their protest will lead to the cancellation of some federal student loan debt. Twenty-eight think it’s likely the boycott will lead the federal government to cancel all federal student loan debt.
The majority of boycotting borrowers, 86%, say it’s ‘very’ (45%) or ‘somewhat likely’ (41%) that their efforts will bring attention to the student loan debt conversation. Sixty-four percent say it’s ‘highly’ (32%) or ‘somewhat likely’ (18%) that a boycott will help elect political candidates that believe in loan forgiveness.
However, according to financial experts, missing student loan payments for any reason may have more negative consequences for borrowers.
“Although the frustration behind the student loan boycott is understandable, it’s unlikely to lead to positive change,” says Jake Hill, founder and CEO of DebtHammer. “Instead, it will destroy the credit scores of those who choose to participate. This may not seem like a major issue in the short term, but failing to pay your student loans can make it more difficult to obtain funding for future purchases. For example, if you default on your student loans, you’ll be unable to obtain most mortgages, which will derail any plans you have to purchase a home.”
7 in 10 borrowers who haven’t resumed payments say they can’t afford them
Sixty-nine percent of borrowers who’ve made no student loan payments since October 2023 say it’s because they can’t afford them.
Sixty-three percent of these borrowers earn less than $45,000 annually. By comparison, 69% of borrowers who’ve made some or all of their student loan payments since October 2023 earn $45,001 or more per year.
Nearly half of borrowers who can’t afford their monthly student loan payments (48%) are unaware that there are income-driven repayment options, such as the Saving on a Valuable Education (SAVE) plan to help them lower their monthly payment amounts.
Of the 41% of these borrowers who are aware of income-driven repayment options, only 29% have enrolled in these types of repayment plans. Forty-four percent haven’t enrolled in an income-based repayment plan, and 15% applied and are awaiting a response.
“Borrowers grappling with student loan repayments should explore income-driven plans, loan forgiveness programs, and loan consolidation as possible strategies for managing their debts,” says Eric Eng, founder and CEO of AdmissionsSight. “Income-driven repayment plans, which align monthly payments with income level, might provide a more feasible payment amount.”
Twelve percent of borrowers who haven’t resumed student loan payments are taking advantage of the Biden administration’s ‘on-ramp,’ in which borrowers won’t face penalties like having missed payments reported to credit bureaus until September 2024. Nine percent of these borrowers are unsure how to make payments, and 7% weren’t aware that the payment pause was ending.
11% of borrowers who haven’t resumed student loan payments don’t plan on repaying loans
While the majority of borrowers who haven’t made any payments intend to start repaying their loans at some point, 11% say they never plan to resume paying back their student loans.
Thirty-six percent plan to resume their payments as soon as possible, while the same number aren’t sure when they’ll start paying again. Eighteen percent plan to wait until September 2024, when they’ll start facing severe consequences for missing payments.
“I understand many people are facing challenges as the student loan repayment pause has ended,” says Andy Chang, founder of The Credit Review. “However, even before somebody’s credit score is affected in 2024, it’s vital to make payments if at all possible to avoid falling into debt distress longer-term. Missing payments can significantly hurt the borrower’s finances by raising the total interest paid and extending the repayment term.”
94% of borrowers say resuming loan payments has been financially challenging
Meanwhile, 94% of borrowers who have made some or all of their monthly payments since the pause ended say resuming payments has been ‘very’ (48%) or ‘somewhat’ (46%) financially challenging.
The majority of borrowers, 66%, began budgeting for payments to resume prior to October 2023. Among borrowers who started budgeting for student loan payments to resume, 46% say resuming payments has been very financially challenging, while 48% say it’s been somewhat financially challenging.
Comparatively, 56% of students who didn’t budget say it’s been very financially challenging to make payments, and 38% say it’s been somewhat financially challenging.
Half of borrowers are working more to afford student loan payments
In order to afford their monthly student loan payments, 58% have cut back on spending on entertainment, leisure, and hobbies. Fifty-two percent are working more hours at their primary job, or have picked up an additional gig.
Other financial changes borrowers have made to afford monthly student loan payments include postponing big purchases like homes or cars (42%), saving less in general savings accounts or retirement funds (39%), spending less on household essentials like groceries and utilities (39%), using savings to make payments (37%), and spending less on healthcare, including prescriptions and mental health care (23%).
Methodology
This survey was commissioned by Intelligent.com and conducted online by the survey platform Pollfish on January 5, 2024. 1,000 respondents completed the full survey.
To qualify for the survey all participants had to have a high school education or above, and were screened to ensure they currently have federal student loans. The age of respondents was balanced to reflect the demographics of student loan borrowers.
To avoid bias Pollfish employs Random Device Engagement (RDE) to ensure both random and organic surveying. Contact [emailprotected] for more information.
