:max_bytes(150000):strip_icc()/WhyYouMayNotNeedToSacrificeRetirementSavingsToPayForStudentLoans-1991339cc6f24dceb2dc3b72a89bb031.jpg?w=1500&resize=1500,1000&ssl=1 "Student Loan Debt Relief Has Been A ‘Lifeline’ For Borrowers, Survey Says | Global News Avenue")
Student Loan Debt Relief Has Been A ‘Lifeline’ For Borrowers, Survey Says
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Main points
- The COVID-19 pause in federal student loan payments helped many borrowers during the worst of the pandemic, according to a news investigation by the government’s consumer financial regulator.
- Most borrowers are finding it difficult to afford their monthly payments when payments restart in 2023, and many are unaware they can switch to an income-driven repayment plan.
- The average household income of borrowers who had their loans canceled was below the national median, and most borrowers who received debt relief reported significant benefits.
after COVID-19 payment pause has endedAccording to a recent survey, most borrowers struggle to pay their monthly bills.
one Consumer Financial Protection Bureau (CFPB) A survey released Wednesday found that many federal student loan borrowers struggled to make their payments between October 2023 and January 2024 and were unaware of helpful repayment plans, but that borrowers who received debt relief experienced significant life changes. change.
“Our survey shows that student loan debt relief has been a lifeline for many borrowers,” said CFPB Director Rohit Chopra. “However, it is clear that many borrowers are struggling with their payments. Struggling, more needs to be done to ensure repayment options are accessible and available. ”
Many borrowers have difficulty making payments and obtaining repayment information
The CFPB said most borrowers have struggled to make student loan payments since the COVID-19 payment moratorium ended in September 2023.
Nearly two-thirds of borrowers reported difficulty making payments, and 37% missed at least one payment. This is especially true for black and Hispanic borrowers, Pell Grant recipients, and those with less than a four-year degree.
Additionally, many borrowers reported not having enough information Income Driven Repayment (IDR) Plans that may lower their payments. About 42% of borrowers said they had only used Standard repayment plan31% of borrowers said they were unaware of the different plans available to them.
Student debt relief significantly improves borrowers’ lives
The Department of Education has worked to alleviate some student loan debt during President Joe Biden’s administration. This resulted in more than 1 million student loan borrowers Their debt has been forgiven, according to the White House.
About 1 in 10 federal student loan borrowers say their loans have been discharged, canceled or forgiven. Of these borrowers, the majority say debt relief has dramatically changed their lives.
The CFPB found that borrowers who reported receiving debt relief in 2022 had median household incomes between $50,000 and $65,000, below the national median of nearly $75,000.
This relief provides most borrowers with the opportunity to make important life decisions. Nearly 61% of borrowers who received debt relief reported being able to make positive life changes they would not otherwise be able to afford.
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