Student Loan Payments Are Weighing on Borrowers
Key Takeaways
66% of federal student loan borrowers say they have cut spending on nonessentials, like entertainment, to help make payments on their loans.
Even though many are taking cost-cutting measures, missing payments is common. About half (49%) of federal student loan borrowers said they have missed at least one payment since payments resumed.
Student loan borrowers aren’t done changing their spending habits. Strong shares say they will make a variety of changes in the future, like reducing travel or saving less, to help fit payments into their budgets.
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When federal student loan repayments resumed in October 2023, wide shares of federal student loan borrowers planned on changing their spending habits to fit student loan payments into their budgets.
About 6 months later, slightly smaller shares of federal student loan borrowers report following through on almost all of the actions surveyed.
Making cutbacks to afford payments is common for federal student loan borrowers
The largest drops were in financial activities that would require big life changes or potentially incur expenses, like finding additional work or cheaper housing. In October, 66% of federal student loan borrowers said they would need to find additional work or increase their working hours to earn more to help make their student loan payments. But in March 2024, just 52% said they followed through on this action, a 14 percentage point difference.
Missing payments is common for federal student loan borrowers
Even though many borrowers are making adjustments to their spending to help afford student loan payments, it looks like it’s not enough: many report missing a payment. About half (49%) of federal student loan borrowers said they have missed at least one payment since payments resumed.
Many also worry they’ll continue to miss payments, or worse default on their loans in the future.
Many borrowers are worried they’ll miss a student loan payment in the future
Half (50%) of federal student loan borrowers said they will miss one or more payments on their student loans now or in the future, with 27% saying they “definitely will.” Less federal student loan borrowers said they will default, but the shares are still quite high. Roughly 4 in 10 (42%) said they will default on their loans in the future.
Borrowers are planning big changes to their budgets in the future
In order to hopefully avoid both those scenarios, borrowers are planning to make even further changes to their spending to fit student loan payments into their budgets. The most commonly cited action is cutting back on nonessentials. Roughly 7 in 10 (69%) student loan borrowers said they would take this action in the future to help ensure they can make payments on their loans.
How federal student loan borrowers plan to change their spending to afford payments
There’s also potential for more support from the government. In April, President Joe Biden unveiled a new plan to forgive student loan debt, which came about a year after the Supreme Court blocked his initial attempt to do so. Biden’s new program is narrower in scope, to help avoid future legal challenges, but still has potential to benefit many borrowers. For example, one provision in the plan that aims to “cancel runaway interest” could impact up to 25 million Americans.
Nicki Zink is deputy head of Industry Analysis. Her team identifies trends affecting key demographics across food & beverage, travel & hospitality and financial services. Prior to joining Morning Consult, Nicki served as the head of digital intelligence at Purple Strategies, a corporate reputation and strategy firm. She graduated from Miami University with a bachelor’s degree in mass communication. For speaking opportunities and booking requests, please email [email protected].
