Report: 90% of federal student loan borrowers are not ready to resume payments on October 1

90% of federal student loan borrowers say they are not ready to resume payments on October 1. Continuing economic challenges and inequitable distribution of information require an extension on federal relief.

Student Debt Crisis, the nation’s largest student debt advocacy organization, and Savi, a social impact technology company working to help solve the crisis, completed a nationwide survey this week with 23,845 student loan borrowers. The survey is the third installment of the Student Debt x COVID-19 series looking at the impact of the pandemic on student loan borrowers. As conflicting information and ‘around the edges’ reforms are enacted, borrowers are left confused about what lies ahead when pandemic-related relief ends on September 30th — another extension or a dreaded return to repayment. These findings show most people still depend on pandemic relief for student loans and it is even more important for Black and brown borrowers, women, and other groups that the economic recovery has not yet reached.

• 9 in 10 borrowers are not ready to begin payments again on October 1st. With 65% of respondents saying they are not ready to resume payments until September of 2022 or do not know when they will be ready again.
• 80% of borrowers say they currently depend on COVID-19 relief for federal student loans and 75% say that the payment pause is critical to their financial wellbeing.
• Nearly one-third of borrowers will have more than a quarter of their income go to student loans if payments resume on October 1st.
• Only 26% of borrowers rated their financial wellness as “poor” or “very poor” before the pandemic began in March 2020, today that number increases to 43%.
• One-third of American Indian or Alaska Native, Black or African American, or Native Hawaiian or Other Pacific Islander respondents say their loan servicer has not communicated updates at all.

“Our third Student Debt x COVID-19 survey proves that pandemic relief for student loan borrowers remains critical to the wellbeing of millions of families. Even with an economic recovery picking up steam, many Americans still shoulder the economic harm caused by the pandemic. A large majority of respondents say they are not ready to resume student loan payments in October when relief is set to end,” said Natalia Abrams, executive director of Student Debt Crisis. “Findings show that most people still depend on pandemic relief for student loans. It is even more important for Black and brown borrowers, women, and other groups that the economic recovery has not yet reached. We urge the Biden Administration to extend the pause on payments and interest for federal student loans to give Americans a chance to land on their feet as the health crisis subsides and the economic recovery grows.”

“Throughout the pandemic Savi has continued to help borrowers navigate the many government programs, helping borrowers lower their monthly payments and get on the road to forgiveness,” said Aaron Smith, co-founder of Savi. “While the payment and interest pause has provided financial relief to borrowers, many are still looking for certainty. We need to do everything in our power to make sure that borrowers are informed and fully prepared for the resumption of payments and can seamlessly get back on track.”

Find the full report here.

The survey received 23,845 responses from people in all 50 states between June 17 and June 22, 2021. The 46-question survey was distributed via email to a group of Student Debt Crisis followers that includes approximately 2 million people. Findings can be broken down by demographic, geographic, occupational and socioeconomic statuses upon request.

Originally published at https://studentdebtcrisis.org on July 6, 2021.