By Owen Daugherty, NASFAA Staff Reporter
With the payment and interest forbearance period on federally-held student loans set to expire at the end of the year without action from Congress, nearly half of borrowers in a new survey said they were not confident they could resume making payments in 2021.
The survey from NerdWallet found 45% of respondents aren’t confident they will be able to make payments when the automatic forbearance period ends. While there are a variety of ways borrowers are currently using the money they would have been putting toward student loan payments, only 25% said they are still making their payments.
The online survey was conducted between October 12-14 and surveyed 2,045 adults, including 592 who have student loan debt. The survey also asked respondents about enrollment and their future plans for their education.
The findings come as the pandemic continues into its ninth month, with cases climbing across the country as the holidays approach. Many advocacy groups and associations — including NASFAA — have called for an extension of the repayment relief provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
About 3 in 10 respondents said they are redirecting money they save to pay off other debt, such as credit cards or private student loans. One-third of respondents said they are using the money that would normally go toward loan payments to pay for necessities like rent and food, while 25% are saving the money.
“The ideal way to use this time will depend on your situation,” said Anna Helhoski, NerdWallet’s student loans expert, in a release accompanying the survey results. “If your finances have remained unchanged during the pandemic, you could put those would-be monthly payments toward lowering your loan principal, which will help you save on interest and get rid of your debt faster.”
About one-quarter of respondents have done just that, saying they are paying the same amount on their loans as they did prior to the onset of the pandemic, with 22% responding that they made additional payments to their loans to pay down the balance of their total debt.
During the forbearance period, the survey found that 25% of borrowers modified their loan payments using an income-driven repayment plan, and 11% refinanced their private student loans. Another 22% said they applied for an unemployment deferment on their loans.
Of the students polled who are currently enrolled in college, 56% indicated they plan to stay enrolled at their current school, 15% said they plan to take the next semester off, 14% said they plan to transfer schools, and 6% said they plan to drop out entirely.
Nearly 80% of currently enrolled respondents currently enrolled in school said the pandemic impacted their choice of where they would attend this year, along with their living situation.
Post-election negotiations on another coronavirus relief package have yet to begin in earnest, with Democrats and Republicans far apart on a price tag for a potential package in the weeks leading up to the election.
Congress could choose to try to tackle additional pandemic-related aid as a standalone measure, or kick consideration for further aid to the new Congress that would be sworn in at the end of January. Another option for the current lame duck session would be to tie additional aid to an upcoming December 11 spending deadline.
Publication Date: 11/16/2020