NASFAA's Altitude: What Does TikTok Have to Say About Who Will or Won't Resume Student Loan Repayment?

Welcome to NASFAA's "Altitude," a new-ish Today's News series that aims to provide a 30,000-foot view on the intersections of economics, public policy, management, and student financial aid. Look for an assortment of links, reactions, conversations, and other missives from NASFAA President Justin Draeger and others. It may be easier to say what this series isn't: a place to find answers to tough regulatory and implementation questions. We'll be trying out this series over the next few months, so please send us your comments and follow us on Twitter

By Justin Draeger, NASFAA President and CEO

This last week, 111 student government leaders urged President Joe Biden "to cancel all federal student loan debt immediately." Pushing aside the myriad public policy challenges and debates that have been enumerated about widespread debt forgiveness ad nauseam,  I'm left with the question:  

Who will choose to start, and who will delay or refuse to begin making payments when the repayment machine is eventually restarted?

The Zeitgeist on Student Loan Debt 

Much of my connection to the cultural currents reverberating through America's youth is via my teenagers. So I went searching for "student loans" in two of the social media apps they use most: Reddit and TikTok. 

Reddit: One of the first and most popular threads on student loans that I found was posted in December from Reddit user u/coffeeandcontemplate's post, who said they would not be resuming student loan payments, despite the Department of Education's announcement that the student loan suspension would end. That post received more than 40,000 upvotes. On the other hand, the respondent who said, "Not paying student loans will result in wage garnishment. Don't be dumb." received only 3,000 upvotes

  • Grain of Salt: The Reddit post was posted in "r/antiwork," a subreddit dedicated for those "who want to end work" and are "curious about ending work." Clearly a selection bias in respondents. 

TikTok: Next, to TikTok, where a search on the term "student loans" yielded a bunch of posts about how to repay one's loans from companies and nonprofits. After sifting through those, I found a post that had racked up 3 million views and received 641,000 likes from user itsmalikel, who said, "Life is too short to pay back your student loans" and urged borrowers to not pay them (punctuated by the fact that student loans are Biden's problem now). 

  • Grain of Salt: While 3 million views is a staggering amount of eyeballs, it doesn't necessarily make a trend. 

Unanswered Questions: 

  1. Will the views and likes of these posts and others represent a growing plan by many borrowers to forgo loan payments when the student loan repayment moratorium ends? 

  2. To what extent will the latest student loan repayment extension or calls for debt forgiveness have on borrowers' willingness to resume repayments? 

Perhaps looking at which borrowers have been repaying throughout the pandemic and have since stopped because of the two reasons above would provide some leading indication of where borrowers might be headed. 

Between the Lines: Student loan discontent alone may not move the needle much on who is and isn't willing to resume repayments, but many are viewing student debt forgiveness as a social justice issue, not just a personally economic one. It's conceivable that a social movement that includes protests against student loan repayment restarts could gain traction. The student loan payment pause was set to expire at the end of this month, but due to successful advocacy and political pressure from congressional Democrats and student debt activists, has been extended to May 1, 2022. 

While there have been several reports about Department of Education activities to smooth the road to repayment, including giving defaulted borrowers a "fresh start," bringing all delinquent loans current, and providing additional periods of forbearance and deferment for borrowers who need it, details from the department have been sparse. 

For those who pushed for an extension, it's not clear what metrics would need to be met in order to restart the student loan repayment machine. The Biden administration felt that with unemployment rates falling quickly, the time had come for borrowers to either resume making payments, or make arrangements for additional forbearance, deferment, or income-based repayment. However, in the waning days of 2021, their political and/or economic consensus changed, and it's not clear how or why, and what criteria would determine whether another pause should be offered in May.

What's Next? Will the May 1 deadline stick? Nowhere in the president's announcement on the repayment extension does it mention that this is the "final extension." Odds may still be low, but there very well could be an increasing contingent of borrowers that will not resume making payments in hopes of forgiveness — as part of a social movement, or in outright protest. 

 

Publication Date: 1/26/2022


David S | 1/26/2022 3:22:57 PM

Regarding "It's conceivable that a social movement that includes protests against student loan repayment restarts could gain traction," I would say that traction is already there. I'm not on Reddit or TikTok (I spend enough time as the oldest person in the room as it is), but I admittedly spend too much time on Twitter, and while I know your argument that Twitter isn't real life Justin, I think the volume of comments I see about this is too high to ignore.

What we're all accustomed to with loan repayment is unsustainable. The system is primarily focused on punishment, negative amortization absolutely buries millions of borrowers, and companies with CEO's making $50M/year are requiring college degrees for jobs that barely pay more than minimum wage. We need significant reform and we need it soon; failure to act is going to be catastrophic and will only serve to further erode America's trust in higher education and support of financial aid programs.

AnnaKate W | 1/26/2022 1:49:53 PM

I am worried about the students who are underemployed or can't find high enough paying jobs to pay off their debt, so they have to make the minimum payments, which as pointed out, only leads to a higher principal. What kind of help can be offered to those students, both who are willing to pay but can't afford it, and the ones who are disillusioned by their increasing debt so they've stopped paying? Besides loan forgiveness? And if loan forgiveness goes through, what message will that send to the current students who are borrowing now? Would they take on more debt, thinking it will be forgiven as well? I'd like to see this series address these questions. I'm very excited about this new column!

Carrie B | 1/26/2022 8:54:57 AM

We need to distinguish between "financial readiness" to resume repayment and "willingness". While there are some worthy proposals re: smoothing the way back after the repayment pause, there are some valid arguments against outright forgiveness. Refusing to enter repayment carries several potential negative consequences for borrowers, including default and wage garnishment. I'm concerned that the campaign for loan forgiveness will distract borrowers from their legal responsibility if loans are not forgiven.

Ben R | 1/26/2022 8:20:15 AM

It might be important to point out that about half of all borrowers were not making payments pre-pandemic. Another substantial percentage, holding the highest balances were paying the minimal amount allowed under IDR just to stay current. Only a minority of borrowers were actually paying down principal. Therefore it is no surprise that so many still "aren't ready" to resume even after a two year moratorium.

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