Half of U.S. Student Loan Borrowers Say They Couldn’t Pay Today
Half of U.S. Student Loan Borrowers Say They Couldn’t Pay Today
(Bloomberg) -- The U.S. moratorium on student-loan payments is slated to be lifted at the end of August, but more than half of borrowers said they wouldn’t be able to make a single monthly payment today if they had to.
That’s one takeaway from a survey conducted by Payitoff among 1,000 student-loan borrowers this month.
The payments and the accrual of interest have been paused since the beginning of the pandemic to give relief to the 43 million Americans burdened with an outstanding student debt. An estimated $1.75 trillion was due as of late 2021, the majority of which to the federal government.
The moratorium has since been renewed six times, but the continued extension has created confusion among borrowers, with 28% unaware of the most recent extension through Aug. 31, according to the survey. Nearly 40% don’t know how much their monthly payments will be when it does expire.
Economists who study student loans, such as Sandy Baum at the Urban Institute, say that communication will be key to restarting the program.
“The government needs to make sure that people have the support and assistance they need to have the information about how to make payments and where to make payments,” Baum said.
Many expect the pause to be prolonged. According to the survey, 55% believe the pause will be extended again and 64% said they would not make a payment until they are legally required to do so.
President Joe Biden on the campaign trail promised to forgive $10,000 in student debt per borrower, but has since said he is waiting for Congress to provide relief through legislative action. Proponents of a broader cancellation include prominent democrats, President Barack Obama’s former education secretary and a former official in the Trump administration’s education department.
In the survey, 40% of respondents said they want the government to explicitly say whether or not it will forgive student loans, even if the answer is no.
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