Consider the coronavirus pandemic — and throw in the passage of time and perceived inaction — and it’s clear that student loan borrowers are losing optimism that relief is on the way.
About 4 in 10 Americans with education debt now say they expect the President Joe Biden-led White House to positively impact their loan repayment, according to our latest survey of 1,000-plus borrowers. That’s down from nearly 7 in 10 borrowers who said the same in December 2020 as Biden was preparing to assume the Oval Office.
Though borrowers’ confidence in federal support, such as mass student loan forgiveness, is waning, a slight majority of survey respondents admit they’re managing their repayment with the potential for forgiveness in mind. More than a quarter of borrowers still believe it’s at least somewhat likely that the U.S. Department of Education will cancel their balance before Biden’s term ends.
- Student loan borrowers have plummeting expectations that the Biden administration will positively impact their student loan debt. Currently, 42% of borrowers expect a positive impact, down from 69% in December 2020 and 60% in July 2021.
- 54% of borrowers say they’re managing their student loan debt with forgiveness in mind. For example, 27% are holding off on refinancing if that would limit or erase their forgiveness eligibility. Meanwhile, 14% didn’t make payments during the moratorium despite being financially able.
- More than a quarter (26%) of borrowers with federal student loans think it’s at least somewhat likely all their debt will be forgiven during Biden’s current four-year term. That’s down from 39% of all borrowers in December 2020.
- 44% of borrowers say federal student loan forgiveness would “completely” improve their financial situation. This percentage climbs even higher among borrowers with doctorates or master’s degrees (60%).
- 55% of borrowers want to see even more changes to the Public Service Loan Forgiveness (PSLF) program, arguing the Biden administration’s recent improvements don’t go far enough. That said, 33% of borrowers are satisfied with the increased accessibility and don’t think further adjustments are needed.
Borrowers lower expectations of forthcoming White House relief
If you asked student loan borrowers, as we did in December 2020, how they envisioned the then-prospective Biden administration would affect their repayment, you were likely to see some smiles. Nearly 7 in 10 (69%) borrowers polled then expected positive ramifications, a stark increase from the 19% of respondents to a similar question in January 2017 as Donald Trump was being installed in Washington, D.C.
Borrower confidence in the Biden administration didn’t come out of nowhere. The candidate-turned-president campaigned on various student loan relief measures, including a $10,000 shot of forgiveness for each federal loan borrower. Even in July 2021, after six months of the administration not taking a meaningful step toward mass forgiveness, 60% of borrowers still expressed optimism in our survey about the end of the federal moratorium on loan payments.
Despite the helpful student loan freeze on interest and payments that the Biden administration has extended four times (the moratorium in early April was extended through Aug. 31), some borrowers have lost hope for further relief. Just 42% now expect additional positive impact arriving from the White House.
Interestingly, borrowers with a doctorate or a master’s degree report having the highest expectations of student loan relief via the Biden administration (57%). That’s compared with 43% of bachelor’s degree-holders and 34% of associate degree-earners.
Prospect of loan forgiveness affecting borrowers’ repayment strategy
Given that student loan forgiveness draws so many headlines, it’s not surprising that more than half of borrowers (54%) report managing their debt while accounting for the prospect of forgiveness. It has affected their decision on refinancing their student loans with a private lender and whether to make voluntary payments during the moratorium. (Survey respondents with six-figure household incomes were most likely to say they’re holding off on paying off their entire student loan balance — 14% — or not making extra payments — 20% — in hopes of forgiveness.)
There are conflicting legal opinions even among the Democrats about the White House’s authority to cancel federal student loans unilaterally via executive order. And given the Biden administration has excluded forgiveness from each of its sprawling legislative and budget proposals to Congress, forgiveness seems far off.
And yet, according to our survey, 26% of borrowers with federal loans think it’s at least somewhat likely that their balance will be zeroed during Biden’s current four-year term. That’s down from 39% of all borrowers in December 2020. (For what it’s worth, Gen Zers ages 18 to 25 are slightly more confident than older borrowers that forgiveness is on the horizon.)
Fair or not, forgiveness could dramatically improve situation for borrowers
Whether elected officials or borrowers think student loan forgiveness on a mass scale would be fair or not (see below), it’s hard to debate how impactful relief would be.
For instance, the $10,000 shot of forgiveness that Biden campaigned on would zero balances for just more than 1 in 3 (34%) federal loan borrowers, according to a March 2021 Student Loan Hero study. Those borrowers, and even those who would receive partial relief, would be freed to attend to other needs in their budgets, pursue financial goals like buying a car or home or otherwise more actively participate in the economy.
According to this latest survey, 44% of respondents with education debt say federal loan forgiveness would “completely” improve their finances. This percentage climbs even higher among:
- Borrowers with doctorate or master’s degrees (60%)
- Borrowers who earn $50,000 to $74,999 annually (56%)
- Gen Xers ages 42 to 55 (49%)
- Associate degree-earners (48%)
- Women (48%)
- Younger millennials ages 26 to 35 (48%)
- Older millennials ages 36 to 41 (47%)
- Borrowers with only federal student loans (47%)
As for whether forgiving debt borrowed for higher education expenses would be fair, it’s a tricky question to answer. For example, about half of Americans believe forgiveness isn’t equitable for borrowers who have already repaid their debt, according to our April 2020 survey on the subject. (It’s hard to imagine the federal government retroactively forgiving recently repaid loans, leading to the belief that those no-longer-indebted borrowers have no realistic way of being made whole.)
Our latest survey indicates that Americans also have varying opinions about what amount of relief is the right amount.
|When it comes to mass student loan forgiveness, what do you think is fair?|
|Forgiving borrowers’ entire balance is fair||43%|
|Forgiving $10,000 per borrower||27%|
|Forgiving more than $10,000 but less than entire balances||23%|
|Mass student loan forgiveness isn’t fair||7%|
Along generational lines, Gen Xers are most likely to say forgiving entire balances is fair (51%), while Gen Zers are least likely (34%). And on the income spectrum, those with household incomes above $100,000 are less likely to support forgiving entire balances for all borrowers than those with lower wages.
Borrowers unsatisfied with Biden administration’s targeted loan forgiveness awards
The calls for mass student loan forgiveness have undoubtedly overshadowed the Biden administration delivering relief through existing or recently expanded forgiveness programs. During Biden’s run in the White House, the Education Department has doled out about $16 billion in targeted forgiveness to 680,000 borrowers, including public servants, borrowers with disabilities and former students defrauded by their schools.
Most notably, the Education Department announced in October 2021 an easing of eligibility requirements for the Public Service Loan Forgiveness (PSLF) program. Under a temporary, yearlong waiver, PSLF applicants who were previously ineligible because of their loan type or repayment plan could now get credit for past, non-qualifying payments. The expanded criteria could make nearly a quarter of all federal loan borrowers eligible for forgiveness, according to our February 2022 research.
Our newest survey shows that a majority of borrowers (55%) think the Biden administration could go further to improve PSLF. One common complaint about the program, historically speaking, has been that you need to work full time for a qualifying employer and make your monthly payments for a full 10 years before receiving a cent of forgiveness. Other forgiveness and repayment assistance programs phase in forgiveness over time. (With Perkins Loan Forgiveness, for example, you receive annual relief on 15% to 30% of your loan balance until it’s zeroed.)
With that said, 33% of respondents to our survey are satisfied with the increased accessibility to PSLF and don’t think further adjustments are needed. There have already been consistent reports about individual borrowers receiving relief, and the Education Department estimates that this temporary waiver could ultimately credit 550,000-plus borrowers with an average of 23 payments toward the program’s 120-payment criteria.
Of course, simply waiting on student loan forgiveness is not a wise repayment strategy for borrowers. Federal loan borrowers should take the following steps:
- Contact your federal loan servicer to ensure your contact information is up to date, as some servicers recently saw their Education Department contracts expire.
- Visit StudentAid.gov to check up on your account and confirm your eligibility for the ongoing federal loan repayment moratorium.
- Come up with a strategy for resuming payments and, eventually, ending your debt by talking to your loan servicer; researching your options using free content and tools like those provided by Student Loan Hero; and consulting outside help (such as a no- or low-cost certified student loan or credit counselor at an accredited nonprofit agency).
Student Loan Hero commissioned Qualtrics to conduct an online survey of 1,048 student loan borrowers ages 18-55 from March 2-11, 2022. The survey was administered using a non-probability-based sample, and quotas were used to ensure the sample base represented the overall population. All responses were reviewed by researchers for quality control.
We defined generations as the following ages in 2022:
- Generation Z: 18 to 25
- Younger millennials: 26 to 35
- Older millennials: 36 to 41
- Generation X: 42 to 55