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With student loan payments set to resume in October and President Biden’s forgiveness plan struck down by the Supreme Court, borrowers might have to look for another escape hatch. One such option might be the Biden administration’s recently announced SAVE (Saving on a Valuable Education) Plan, which increases the income threshold for $0 required monthly payments to $32,805 from $22,000, limits unpaid interest, and opens the door for cancellation of loans $12,000 and under after 10 years of payment.
While this plan will also likely be subject to legal challenges, CivicScience gauged interest among student loan borrowers – and right now, it seems quite popular. More than half (55%) of all borrowers are at least ‘somewhat likely’ to apply for the SAVE Plan, with 3-in-10 claiming to be ‘very likely.’
CivicScience has thoroughly covered borrower sentiment and concern following June’s Supreme Court decision, gauging which major areas of investment borrowers are likely to delay and brands that could be disproportionately impacted by payments resuming. The latest data offer insights into when borrowers expect to pay off all of their student loans. A plurality of borrowers expect to be student debt-free within the next 2-5 years (31%) – and nearly half expect to be all paid off in five years or less (17% think they’ll be debt-free within the next year). On the other side of the coin, nearly 1-in-5 borrowers expect to be debt-free in excess of 20 years.
Gen Z borrowers are by far the most optimistic about paying off all their student loan debt, with nearly two-thirds expecting to be finished in five years or less. Just 16% of this age bracket think it will take a decade or longer to pay off all their loans. Meanwhile, borrowers 35 and older are the most likely to think it will take more than 20 years to pay off all of their debt (over 30%) – but roughly 80-90% of adults 35 and older don’t have any student loans. Maybe you can chalk this up to heftier remaining bills, or the pessimism that comes with more than a decade of student loan payments under their belt.
Another trend to monitor with potential market impacts in the coming month: borrowers getting a head-start on paying back loans to beat the resumption of interest. Twenty-seven percent of borrowers say they’re ‘very likely’ to make student loan payments before interest resumes on September 1 – and more than half claim they’re at least ‘somewhat likely.’
Three more key student loan insights for this month:
- Nearly one-third of borrowers who plan to pay off all their loans in the next year say it’s ‘very likely’ they switch banks in the next three months – with almost two-thirds claiming it’s at least ‘somewhat likely’ they switch.
- Registered Democrats are nearly twice as likely as registered Republicans to say they’re ‘very likely’ to apply for the SAVE Plan (43% compared to 22%) – but 41% of Republican borrowers are at least ‘somewhat likely’ to sign up.
- Nearly half of borrowers at least ‘somewhat likely’ to apply for the SAVE Plan say they’re ‘financially better off’ compared to before the COVID-19 pandemic. Meanwhile, 42% of borrowers ‘not at all likely’ to utilize it say they’re ‘worse off.’
CivicScience will continue monitoring the consumer impact of student loan payments resuming this fall. If you’re looking to stay ahead of the coming market shifts, book a meeting today and unlock a free month of premium content.