46% With Federal Student Loans Don’t Know How Much They Owe

Student loan forbearance is ending soon, and a new NerdWallet survey finds that many aren’t sure how much they owe, whom they owe it to or how they’ll make payments.
Erin El Issa
By Erin El Issa 
Updated
Edited by Karen Gaudette Brewer

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The federal student loan payment pause — the pandemic-era forbearance that’s been in effect since March 2020 — is coming to an end in the next few months, and according to a new NerdWallet survey, more than a third of federal student loan borrowers (36%) don’t expect to be able to make payments at that time.

The survey of more than 2,000 U.S. adults — among whom 316 have federal student loan debt — conducted online by The Harris Poll, asked federal student loan borrowers how they’ve used the money that would’ve gone toward payments during forbearance. We also asked about what they know (or don’t know) about their student loan balances and how they would advise others when it comes to education debt.

Key findings

  • Most borrowers used would-be federal student loan payments to cover necessities: The majority of federal student loan borrowers (88%) didn’t continue making payments during automatic forbearance; 73% of federal student loan borrowers used at least some money that would have otherwise gone to loan payments to pay for necessities.

  • Some borrowers don’t know how much they owe or whom they owe it to: Nearly half of federal student loan borrowers (46%) don’t know how much student loan debt they currently have and 57% don’t know who their loan servicer is.

  • Many agree college is worth the cost, but student loan debt is a burden. While 72% of Americans who went to college say their degree was worth the cost, three-quarters of Americans who took out student loans for their own education (75%) say they would advise others to take on less student loan debt than they did.

“Paying back student loans can be a significant drag on consumers’ finances after they graduate, and the pause on federal loan payments served as a much-needed reprieve during a period of economic uncertainty and inflation,” says Kimberly Palmer, personal finance expert at NerdWallet. “Now, reality is about to hit as those loans once again come due.”

Many borrowers say forbearance improved their financial situation

The payment pause on federal student loans began in 2020 in response to the COVID-19 pandemic. Since then, borrowers haven’t accrued interest or been required to make monthly payments on these loans. Many borrowers benefited from this break: The survey found that nearly two-thirds of federal student loan borrowers (65%) say that student loan forbearance has improved their finances overall.

But 3½ years later, that pause is coming to an end. In September 2023, interest will start to accrue again, with payments beginning for federal student loan borrowers in October. The vast majority of borrowers haven’t had these payments in their budgets during this time — our survey found that 88% of federal student loan borrowers didn’t continue making payments during automatic forbearance.

Some borrowers don’t make enough to afford loan payments

Making student loan payments of hundreds of dollars (or more) could be a hard transition for many, particularly after the squeeze of inflation over the past year. According to the survey, nearly 2 in 5 federal student loan borrowers (38%) say they’ll need to significantly change their budget in order to afford student loan payments once forbearance ends. And nearly 3 in 5 borrowers (57%) say they need to make more money in order to comfortably afford their student loan payments.

After several years of nonpayment, not everyone knows how much they owe, whom they owe it to or how to make their payments. The survey found that 46% of federal student loan borrowers don’t know how much student loan debt they currently have, and 57% don’t know who their loan servicer is. Nearly a third of federal student loan borrowers (31%) aren’t sure what their interest rates will be when forbearance ends, and more than a quarter (27%) aren’t sure how to make payments at that time.

Depending on their financial situation, it may make sense for some borrowers to opt for an income-driven repayment plan to lower their monthly payments. But while a quarter of federal student loan borrowers (25%) plan to change their repayment plan once the payment pause ends, 3 in 5 borrowers (60%) don’t know their options for repayment programs.

Most borrowers would advise others to take on less debt

Nearly half of Americans who went to college (48%) took out student loans to pay for their education and more than a quarter of Americans with adult children (27%) say they’ve taken on student loan debt for their kids. And while just 29% of Americans who took out student loans for their children regret it, there seems to be more turmoil felt by those who took out loans for themselves.

Nearly three-quarters of Americans (72%) who went to college say their degree was worth the cost. But this is truer for those with household incomes of $75,000 or more (77%) than those with household incomes of less than $75,000 (62%). Just over half of those federal student loan borrowers (53%) say their degree was worth it.

Most Americans who currently have federal student loan debt (85%) would advise others to take on less student loan debt than they did, according to the survey.

What you can do

Figure out how much you owe and to whom. Payments resume in October, so it’s a good idea to figure out what you owe and how much you can expect to pay each month. Log in to the Federal Student Aid website (you may have to create an FSA ID if it’s your first visit). On your dashboard, you’ll see your loan balance on the left and the details of your loan servicer(s) on the right. You should be able to find out how much your payments will be on the servicer website, as well as when your first post-forbearance payment is due.

“The first step to feeling in control of your finances and debt is to understand the details of what you owe and to which lenders. Then, you can make a plan and adjust your budget so you can manage those payments as they ramp back up,” Palmer says.

Look into your payment program options. The Biden administration has instituted a 12-month on-ramp for borrowers — during which those who don’t make payments won’t go into default — but interest will still accrue on these balances, so it’s a good idea to pay if you can.

The standard loan repayment plan is 10 years, and if you can afford the payments under this plan, you’ll pay less interest than you’d accrue on an income-based or extended repayment plan. However, if the payments are too high for you to reasonably make, there are other federal student loan repayment plans available to you.

There are several income-driven repayment plans, including the Biden administration’s update of the existing REPAYE plan called SAVE, that lengthen your repayment period significantly and cap your payments at a percentage of your discretionary income. At the end of the repayment period — generally 20 or 25 years — you can get the remaining balance forgiven, though you may owe taxes on the amount discharged.

The graduated repayment plan is a 10-year plan, just like the standard repayment plan, but starts with lower payments and then increases them every two years. It will cost more in interest to go this route, as opposed to the standard repayment plan.

There’s also the extended repayment plan, which is a 25-year repayment plan for those with more than $30,000 in student loan debt. It could be either graduated (starting with lower payments and increasing every two years) or fixed (equal payments the entire time). This plan is a costly one and probably not the best option for most people.

If you want to apply for any plan aside from the standard repayment plan, you can do so with your federal student loan servicer. Income-driven repayment plans can also be accessed by applying on the Federal Student Aid website.

Make a plan to pay off your student loans. More than half of federal student loan borrowers (51%) say they will never pay off their student loan debt in full. Debt can be overwhelming and your balance may feel insurmountable, but paying it off might be more doable than you think. It could take longer than the 10 years of a standard repayment plan, but that’s OK. Find a payment program that works for you and put extra money toward your loans when you can. Here are some tips if you want to pay off your student loan debt faster.

“One way to stay motivated is to reward small progress along the way. After making on-time payments for six months, celebrate with friends and family. Sharing your goals and creating incentives along the way can keep you focused on the ultimate goal of one day being student loan-free,” Palmer says.

Current or future students: Apply for scholarships. Close to half of federal student loan borrowers (45%) say they wish they would’ve applied for more scholarships to help pay for college. Scholarships aren’t just for first-year college students. In addition to talking to your school’s financial aid office to see what scholarships are available, you can check out scholarship websites to get more money to help pay for school to reduce any student loan burden you take on.

“Reflecting on the opportunities your education provided and what you got out of the student loans can help counteract their heaviness. And you don’t have to carry that weight alone; support in the form of your university’s aid office and income-driven repayment plans are also available,” Palmer adds.

Methodology

This survey was conducted online within the United States by The Harris Poll on behalf of NerdWallet from June 15-20, 2023, among 2,076 U.S. adults ages 18 and older, among whom 316 currently have federal student loan debt. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within +/- 2.7 percentage points using a 95% confidence level. This credible interval will be wider among subsets of the surveyed population of interest. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact Alikay Wood at [email protected].

Disclaimer

NerdWallet disclaims, expressly and impliedly, all warranties of any kind, including those of merchantability and fitness for a particular purpose or whether the article’s information is accurate, reliable or free of errors. Use or reliance on this information is at your own risk, and its completeness and accuracy are not guaranteed. The contents in this article should not be relied upon or associated with the future performance of NerdWallet or any of its affiliates or subsidiaries. Statements that are not historical facts are forward-looking statements that involve risks and uncertainties as indicated by words such as “believes,” “expects,” “estimates,” “may,” “will,” “should” or “anticipates” or similar expressions. These forward-looking statements may materially differ from NerdWallet’s presentation of information to analysts and its actual operational and financial results.

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