Student loan payment restart creates confusion — underserved borrowers most at risk
Next month — October 2023 — 43.6 million student loan borrowers will see an additional bill in their mailbox. The three-year pause in payments has ended, and student loan borrowers will need to start repaying their loans again.
In June of 2023, WGU Labs and Savi, with the assistance of Gallup, fielded a survey of a nationally representative sample of 3,406 student loan borrowers aged 21 to 50 to learn more about what they owe, how they’re navigating repayment, and how the debt they carry shapes their personal, professional, and financial choices.
We learned that most borrowers aren’t fully aware of all the options they have, and aren’t taking advantage of the best option available for their circumstances. The information gap seems particularly dire for borrowers who have not obtained bachelor’s degrees. As the federal government introduces still more repayment options, this gap will likely only widen, and the need to support borrowers through repayment will be paramount.
Key Takeaways:
- Borrowers without a bachelor’s degree will experience a larger impact on their budgets when repayments resume. Borrowers without a bachelor’s degree make 42% less in median weekly earnings than those with a bachelor’s degree. That means even if their payments are lower, each payment will cut more deeply into the budgets of those without a bachelor’s degree.
- Borrowers without a bachelor’s degree are less likely to engage with their loan servicers. One in four borrowers without a bachelor’s degree don’t know who their loan servicer is, compared to one in ten with a bachelor’s degree or higher.
- Borrowers without a bachelor’s degree are less familiar with all their repayment options. Over 15% of borrowers with less than a bachelor’s degree reported not knowing any of their repayment options, compared to only 9% of borrowers with a bachelor’s degree or higher.
- Borrowers without a bachelor’s degree are less likely to take advantage of alternative repayment options. Just 56% of borrowers with less than a bachelor’s degree reported using an alternative repayment plan, compared to 65% of borrowers with a bachelor’s degree or higher.
