Federal student loan debt still burdensome for borrowers despite relief, survey says
The student loan payment pause and debt forgiveness plan may clear the path to owning a home for some, the White House says
The Biden administration's student loan forgiveness plan could help millions of Americans find relief, but many have said they are struggling to repay debt they still owe, according to a survey. (iStock)
A majority of Americans with outstanding federal student loans are struggling to afford payments even while benefiting from relief under the Biden administration, a survey said.
Sixty-three percent of Americans are having a hard time repaying their federal loans, according to a survey by ELVTR, an online education platform. That's taking into account the Biden administration's student loan forgiveness plan, which has faced a series of legal challenges since it was first announced in August. These roadblocks have also led to an extension of the payment pause.
ELVTR's study on higher education issues in the U.S. surveyed 2,000 Americans between the ages of 18 to 67 who have received some form of higher education.
Sixty-nine percent of women said they're struggling to repay their student loans, the survey said. Meanwhile, 79% of Black and African American respondents reported that they are "unable or barely able to afford payments."
Student loan forgiveness under President Biden's plan could "help millions to avoid defaulting as the cost of living crisis intensifies," ELVTR said.
"However, with the average balance standing at $38,000 and the cost of college rising faster than inflation, the majority of Americans are still struggling to pay," ELVTR continued.
Biden announced in August that his administration would cancel $10,000 in federal student loans per borrower, or $20,000 in student loans for Pell Grant recipients. The plan only applies to individual borrowers who make less than $125,000 or households who make less than $250,000.
If you have private student loans, refinancing at a lower interest rate could help you reduce your monthly payments and repay your loans faster. Visit Credible to find your personalized interest rate without affecting your credit score.
WILL REFINANCING YOUR STUDENT LOANS SAVE YOU MONEY?
Many borrowers say they’re delaying major life events
The majority of Americans (84%) with student loans said they had to delay a major life event because of the debt, the ELVTR survey said. Thirty-two percent delayed starting a family, 53% have put travel plans on hold and 64% said student loan debt impacted their ability to make major purchases such as a home or car.
"With the pandemic having left 10 million Americans out of work and the cost of food, gas and rent soaring, hard-working people are being forced to cut back on essentials," ELVTR said. "For 44 million graduates, a five-figure student loan debt compounds the financial strain."
The Consumer Price Index (CPI), a measure of inflation, rose 7.7% year-over-year in October, a slowdown from the 8.2% increase in September. On a monthly basis, inflation rose 0.4%, the same increase as in September, BLS said.
Overall, prices for shelter, food and gas increased in October, with prices for shelter contributing to more than half of the monthly all items increase.
If you have private student loans and don't qualify for federal debt relief, you could consider refinancing to lower your student loan payments. Visit Credible to compare multiple student loan lenders at once and choose the one with the best interest rate for you.
BIDEN ADMINISTRATION EXTENDS STUDENT LOAN PAYMENT PAUSE INTO 2023
Student debt relief could clear path to homeownership, White House says
The Biden administration's decision to cancel $10,000 or more in student debt for millions of Americans could offer a short-term boost in spending power and help clear the path to homeownership for some borrowers, according to the president.
"All of this means people can start to finally crawl out from under that mountain of debt to get on top of their rent and their utilities, to finally think about buying a home or starting a family or starting a business," Biden said in August.
Student loan forgiveness means that many borrowers could see their monthly debt payments lowered and, as a result, their debt-to-income (DTI) ratio drops, according to a recent Urban Institute report.
DTI measures the percentage of income that goes toward debt repayment each month and is used by lenders to determine a person's eligibility for a mortgage.
Additionally, 79%, or 30 million federal borrowers, saw improvements to their credit scores throughout the payment pause, according to a study from the Federal Reserve Bank of New York.
If you’re looking to reduce your monthly payment on your private student loans, you could consider refinancing to a lower interest rate. To see if this is the right option for you, you can contact Credible to speak to a student loan expert and get all your questions answered.
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