With inflation and consumer debt at all-time highs, 92% of fully employed student loan borrowers are concerned that rising costs will make it harder to afford their payments come May 1.
FOR IMMEDIATE RELEASE: February 23, 2022
WASHINGTON, D.C. — A new survey of 23,532 student loan borrowers finds that 92% of fully-employed borrowers are concerned about being able to afford their payments due to rising inflation when the current pause on payments and interest expires on May 1. The situation is worrisome, as one-in-three borrowers say they reduced spending on necessities like food, rent, and healthcare in preparation for payments to restart.
The new research comes from a joint campaign between Student Debt Crisis Center (SDCC), the nation’s largest student debt advocacy organization, and Savi, a social impact technology company that helps borrowers get student loan forgiveness. The survey is the fifth installment over the past two years of the Student Debt x COVID-19 campaign looking at the toll the pandemic continues to take on a whopping 46 million student loan borrowers.
The survey also found that:
95% of Black borrowers are not prepared to resume payments on May 1.
93% of borrowers are not prepared to resume payments on May 1 and another 27% say they will never be able to resume payments again.
91% of fully employed borrowers do not agree with the idea that the economy has recovered from the impacts of the COVID-19 pandemic.
61% of respondents who could easily afford their student loan payments before the COVID-19 pandemic began are either struggling to make payments, cannot make payments, or are in default.
Over half of borrowers say their student loan servicer has not contacted them to say that federal student loan payments are set to resume on May 1.
Over half of borrowers lost their job, had reduced hours, or were furloughed due to the COVID-19 pandemic.
These results add important context around other obstacles facing student loan borrowers. Inflation is at its highest level in over 40 years and recent reports from the New York Fed and the Federal Reserve show that Americans shoulder the highest household debt increase since the 2007 recession. 85% of survey respondents reported that the payment pause is financial relief that they currently depend on, with low-income and working-class borrowers more likely to use monthly savings from federal payment pause to pay for food and healthcare or medicine.
“We have followed the experiences of student loan borrowers for over two years and we are saddened to report their circumstances are getting worse. Our findings show that the ongoing pandemic combined with unprecedented inflation are huge obstacles for borrowers who are, by and large, not ready to resume payments, struggling to afford basic needs, and confused about their options moving forward,” said Natalia Abrams, President and Founder of the Student Debt Crisis Center. “To meet this moment, we call for broad debt cancellation to repair the harm caused by this crisis and a roadmap to help borrowers navigate the uncertain future.”
“The vast majority of borrowers have not made a payment in over two years,” said Tobin Van Ostern, co-founder of Savi. “On top of the unprecedented pause, millions of borrowers are currently in the process of who will process their monthly bill if payments resume - the largest servicing transition to ever occur for borrowers. With both happening at the same time, clear guidance and communication to borrowers from the Dept of Ed is essential.”
The survey received 23,532 responses from people in all 50 states between February 1 and February 15, 2022. The 54-question survey was distributed via email to Student Debt Crisis Center followers that includes approximately 2 million people. Findings can be broken down by demographic, geographic, occupational and socioeconomic statuses upon request.