Americans looking forward to more student loan relief

Federal Reserve Bank survey reveals many have higher hopes for federal student debt forgiveness, particularly older borrowers.

Americans expect more federal student debt forgiveness in a survey conducted by the Federal Reserve Bank of New York last month.

The average perceived likelihood of a year-ahead increase in federal student debt forgiveness rose to 39% in April compared to 28.7% when the poll was last conducted in December. This is the highest reading since August 2022.

The expectations for federal student debt forgiveness was highest among older Americans. The share of consumers age 45 and older anticipating more relief rose sharply.

More than one in 10 Americans with federal student loans have been approved for some measure of debt relief under President Joe Biden. He initially vowed to cancel about $400 billion in student loan debt but that plan was struck down by the US Supreme Court last year.

Roughly 43 million Americans owe $1.6 trillion in student debt. Since last fall, consumers have been required to pay back this debt after a pause was put in place after the pandemic. But, missed federal student loan payments will not be reported to credit bureaus until the fourth quarter of this year. More than one in six borrowers reported being behind on payments.

Over the last six months, consumers have made about $32 billion in loan payments. But millions of consumers have not made any payments and many question the value of their degree. About one quarter of those who received a bachelor’s degree from a private not-for-profit institution would have done their education differently if given the chance, according to the 2023 Survey of Household Economics and Decisionmaking.

Even though millions of people have benefited from recent debt relief measures, new students who borrow will face more expensive loans. Earlier this month, the US Department of Education announced the interest rates on federal student loans for the upcoming academic year will be the highest in more than a decade. The rise in student loan interest rates will likely further pressure the Biden administration to do more to relieve borrowers.