Want to save this page for later?

NextGen Magazine

 
 

Large Majority of Student Borrowers Say They Are Unprepared to Resume Payments

By:
Chris Gaetano
Published Date:
Nov 23, 2021
student-loan-debt-1160848_1280

A recent survey has found that 89 percent of student borrowers report that, despite being employed full time, they are not in a financial position to resume paying back their loans come February, when the federal forbearance period, initiated in response to the pandemic, ends, Forbes reported. About 21 percent of respondents said they felt pessimistic that they would ever be in such a position.

Generally, these borrowers found the pause critically important, as 88 percent said that the relief was vital to their financial well-being during the pandemic, and 87 percent said it made it possible to afford other bills. This situation likely arose because the pandemic sharply increased the number of those struggling economically: 45 percent now say their financial wellness is either poor or very poor, compared to  25 percent who said that this was the case before the pandemic. 

When people do resume payments, about 27 percent said that their debt will take up about a third of their income or more; 10 percent said half their income will go toward student loans. The organization behind the 33,000-person poll, the Student Debt Crisis Center, said that these responses indicate the need for action in order to avoid a major economic fall. 

“Our newest Student Debt x COVID-19 survey proves that student loan borrowers face economic obstacles that are larger and longer-lasting than we imagined. As the economy recovers, even fully-employed student loan borrowers are not financially secure enough to make payments again. Simply put, Americans with student debt aren’t facing an employment crisis, they are facing a student debt crisis,” said Natalia Abrams,  founder and president of the Student Debt Crisis Center. “When the payment pause ends on February 1, borrowers will have the rug pulled out from under them as they work to get back on their feet. We are especially concerned that the burden of loan payments will collide with other changes in the economy. Economists warn of rising inflation and costs and our survey finds that many borrowers will see over one-third of their income go to student loans when payments resume.”