CNBC|Momentive Poll: Student Loan Repayment August 2022
Amid ongoing record-high inflation, student loan forgiveness may take a backseat.
Student loan forgiveness may be crushed by inflation concerns
Amid ongoing record-high inflation, student loan forgiveness may take a backseat: 59% of Americans are concerned that student loan forgiveness will make inflation worse. This sentiment remains true across most demographic groups.
- Republicans are especially concerned: 81% of Republicans say student loan forgiveness will make inflation worse, nearly double the number of Democrats who say the same (41%)
Forgiveness aside, borrowers may still face other hurdles: should loans be forgiven, 39% expect borrowers to have to pay taxes on the forgiven balance; 33% aren’t sure whether borrowers should be subjected to taxes on the forgiven balance and 25% say they don't expect borrowers to have to pay taxes on the forgiven balance.
Americans remain split on the future of student loans
Americans are split on what will happen after August 31, the latest deadline:
- 30% expect student loan payments to resume on September 1;
- 29% expect some individuals’ student loans to be forgiven;
- 26% say student loan payments will be paused again;
- and just 11% say all student loans will be forgiven – all relatively unchanged from a January CNBC|Momentive poll when student loans were set to resume on May 1.
Looking ahead, 34% say loans should be forgiven for those in need, 32% say all student loans should be forgiven, and 30% say no student loans should be forgiven for anyone. These numbers, too, have held steady since January.
- 61% of federal student borrowers say all student loans will be forgiven – more than double the number of those without federal student loans (27%)
- Republicans are wary of forgiveness: 58% of Republicans say loans shouldn’t be forgiven for anyone, more than 5x the number of Democrats who say the same (10%)
But for now, loan forgiveness is far off: 77% haven’t received any type of loan cancellation or forgiveness. Among the few that have, 15% are currently pursuing the cancellation of their loans, but very few have actually had loans canceled either by qualifying for working in a nonprofit/public role (3%) or because of a special circumstances discharge (3%).
Federal loan borrowers shift financial priorities amid a two-year pause
Amid a more than two-year pause on federal student loan payments, the majority of borrowers (61%) say they haven’t continued to make payments during the pause, down slightly from January (67%). Just 20% say they continued their monthly payments while 16% made less frequent payments.
With the money saved on student loan payments, borrowers shifted their financial priorities:
- Most (51%) say they used it for everyday expenses;
- Paying off other debts (32%);
- Student loan payments (15%);
- or saved it (11%), all relatively on par with January.
Few are spending more: 63% of federal loan borrowers say their spending on other items has stayed the same during the student loan payment pause, roughly unchanged from January (66%). Just 23% say their spending on other items has increased while 11% say their spending has decreased.
Federal loan borrowers face a mixed financial outlook
Amid ongoing economic woes, federal student loan borrowers faced a mixed financial outlook:
- Just 6% of federal student loan borrowers describe their household finances as “excellent”, while 11% of those without federal student loans say the same
- Yet, 28% of federal student loan borrowers say their financial situation has improved over their last two years, vs. 22% of non-federal loan borrowers
But, payment plans provide little relief: 31% of those participating in payment plans say their household finances have improved over the last two years, just slightly above borrowers who don’t have payment plans and say the same (25%).
Federal loan borrowers most likely to be people of color, women
Nearly all Americans (72%) have some sort of debt, whether it be credit card debt (40%), a car loan (36%), a mortgage (33%), or medical debt (17%). But, just 14% have federal student loans while less than half as many (6%) have private student loans.
Not all federal loan recipients completed their college degree, leaving them in debt but also without the certification they had borrowed to get:
- Just 32% of those who didn’t complete college and have federal student loan debt rate their household finances as “excellent” or “good” – far below those with a high school diploma/some college and no debt (42%); federal student loan debt and a college degree (53%); and those with a college degree and no debt at all (73%)
- Those who have federal loans but who didn’t complete their degree are more likely than those with a degree to owe less than $25,000 (56% vs. 30%) and more likely to say they don’t know the interest rate currently being charged for their loans (47% vs. 25%)
With student loan forgiveness, borrowers would focus on major financial goals
The vast majority of federal student loan borrowers (76%) say they’ll have to delay key life milestones in order to resume student loan payments, roughly on par with January (79%).
But, should student loan forgiveness put extra money back in their monthly budget, the order of priorities would remain largely unchanged: most would opt to pay off other loans (53%), save for retirement, (45%), invest (41%), buy a home (34%) or travel (32%) while fewer would have a baby (11%), get married (10%), or find a new job (8%).