Student loan borrowers get a break this year, at least for a few months. With an estimated $1.6 trillion owed in student loan debt affecting 41 million Americans, President Biden’s renewed pause on student loan repayments appears to be welcomed by many, according to recent findings from CivicScience.
Surveying more than 4,800 U.S. adults finds that slightly more than 25% of respondents have federal loans that qualify for the extended relief plan. When asked whether or not they will take advantage of the renewed repayment freeze, the majority of these loan borrowers (64%) say they are likely to hold off on making payments and put their money towards something else. Alternately, 37% are likely to either continue paying on their loans or at least set aside money for payments.
The survey found that age is one of the biggest factors in the decision to postpone student loan repayment. Adults ages 35 and older are noticeably more likely to suspend payments and use their money otherwise. Considering that these adults are also more likely to have accrued other types of loan debt, such as mortgages, helps to paint the picture of why someone may choose to wait on making payments.
The extension also applies to a freeze on student loan interest, which is currently 0%. With the Fed’s proposed interest rate hikes on the horizon, that may be a boon for anyone looking to borrow student loans between now and May when the loan repayment pause is set to expire.
Looking at reactions to the Fed’s plans, a survey of more than 2,700 U.S. adults yields mixed results. Americans are largely split over whether or not the interest rate hikes to address current inflation will help or hurt the economy overall: 35% think the hikes will be positive, while 40% believe the opposite. The remaining quarter feel they won’t make much of a difference or are uncertain.
The data indicate those with debt – including student loan, home equity, credit, mortgage, and auto debt – are overall slightly more inclined to feel negative about the interest rate hikes.
However, a much stronger indicator is how concerned someone is about inflation in the United States right now. More than half (54%) of survey respondents who are “very concerned” and one-third (32%) who are “somewhat concerned” about inflation say the rate hikes will be negative for the economy. For these individuals, comprising a substantial portion of the population, the rate hikes are not likely to ease worries or expectations surrounding current inflation.
Stay tuned as we track developments and dive deeper into these hot issues – student loan debt and interest rate hikes – in the weeks ahead.