As student loan payments resume, some borrowers aren’t spending less
Most student loan borrowers in a recent survey said they aren’t cutting back on their spending habits, even after payments resumed in October for the first time in more than three years.
Less than half of the borrowers who responded to a University of Michigan poll said the return to repayment caused them to spend less. Roughly three in 10 said they’re now saving less money.
“The results show that a relatively small minority of Americans reduced their spending following the resumption of student loan payments,” researchers concluded in the survey, which was published last week.
The findings are based on a poll of about 550 borrowers with outstanding student loan debt who were surveyed between late September and mid-January.
Student loan payments came due for more than 20 million Americans in October – the first time since March 2020. According to the survey, only about 40% of the respondents whose loan bills came due in October said they’d be reducing their overall spending as a result.
The findings, though not representative of all borrowers, buck the expectations of those who’d been bracing for a potential downturn in consumer spending as the unprecedented pandemic-era pause in student loan payments came to a close.
Crippling debt: Rich colleges leave students with crushing debt. Republicans want to fine them for it.
Ripples, not waves: Student loan payments restarted after a COVID pause. Why the economy is barely feeling it.
The return to repayment hasn’t been smooth. Four in 10 federal student loan borrowers missed paying their first bill since the pandemic, according to the Education Department. The agency says just 60% of 22 million people made their payments on time.
As those bills came newly due in the fall, borrowers spent hours on hold with loan servicers. Many received erroneous billing statements. And millions of them didn’t even get those statements on time, prompting the federal government to impose massive fines on some of the country’s largest servicers, including Aidvantage and the Missouri Higher Education Loan Authority, or MOHELA.
Student loan companies, on the other hand, laid the blame on the Biden administration for botching the repayment launch.
A report published earlier this month by the Consumer Financial Protection Bureau ,a federal oversight agency, said the situation posed “serious implications for borrowers as well as for servicers’ compliance with state and federal consumer financial protection law.”
Zachary Schermele is a breaking news and education reporter for USA TODAY. You can reach him by email at zschermele@usatoday.com. Follow him on X at @ZachSchermele.
This article originally appeared on USA TODAY: Student loan repayment isn't pushing some borrowers to spend less
