Here’s what student loan borrowers think about student loan forgiveness — and it’s not what you expect.
Here’s what you need to know.
A new report from the Federal Reserve Bank of Philadelphia shows what student loan borrowers think about student loan forgiveness, student loan relief, student loan forbearance and student loan cancellation. According to the national survey:
- No cancellation of most student debt: Among current student loan borrowers, there was not support for canceling most or all student loans.
- Targeted student loan relief: Most respondents — either with or without student loan debt — said any student loan cancellation should be targeted.
- Cancel some student loans: 86% of student loan borrowers said there should be at least some wide-scale student loan forgiveness.
- Limited student loan forgiveness: A majority of respondents without student loans preferred no, or relatively limited, federal student loan cancellation (such as $10,000 or less per borrower).
- Long-term solutions needed: More than 20% of student loan borrowers are “chronically struggling” with student loans and need more permanent financial assistance than a temporary student loan payment pause.
- Student loan forbearance may not help: Another extension of student loan forbearance won’t help these financially vulnerable student loan borrowers. Most of these borrowers were making partial or no student loan payments before the Covid-19 pandemic.
Student loan forgiveness: What this means for your student loans
There are several takeaways from this report, which includes a national sample of 13,423 consumers. These findings, while only one survey, could influence President Joe Biden as he considers student loan forgiveness for millions of student loan borrowers. First, most student loan borrowers don’t support canceling all or most student loans. Progressive Democrats in Congress have supported total student loan cancellation or at least up to $50,000 of student loans. However, Biden has said he won’t cancel most student loan debt. Second, respondents said they prefer that student loan cancellation be targeted to specific student loan borrowers rather than most or every student loan borrower. Sen. Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY) have focused on wide-scale student loan cancellation. Since becoming president, Biden has canceled more than $17 billion of student loans. Biden has targeted student loan forgiveness to specific student loan borrowers who, for example, work in public service, have a permanent disability, or who were misled by their college or university. Third, more than 20% of student loan borrowers are struggling financially. These borrowers are facing financial financial hardship chronically and need a fresh start on their student loans. Any potential student loan forgiveness could help these student loan borrowers, in . (Student loan forgiveness: 5 key takeaways from major announcement).
Student loans: what’s next
Biden said he could announce a decision on student loan forgiveness within weeks. There’s no guarantee that Biden will cancel student loans or who will qualify for student loan forgiveness, however. For example, Biden could limit student loan forgiveness to federal student loans or college student loans only. Biden also could exclude higher income earners. Earlier this month, for example, the Biden administration floated an income threshold of $125,000 annually. That said, Biden could lower that income cutoff to $75,000 if he chooses to match the income requirements for the stimulus checks in response to the Covid-19 pandemic. If Biden proceeds with at least some student loan cancellation, he could end student loan relief on August 31, 2022. Make sure you’re prepared. Here are some popular strategies to save money on your student loans:
- Student loan refinancing (lower interest rate + lower payment)
- Income-driven repayment (lower payment)
- Student loan forgiveness (federal student loans)