Special Four-Report Series on Student Loan Payments Resumption


A person sitting at a desk with an open notebook, entering numbers in to a calculator.

Report

In a four-part series of special reports, the Federal Reserve Bank of Philadelphia studies the financial and economic impacts of the federal student loan payments resumption.

The federal student loan system saw millions of borrowers who were expected to make payments on their loans on October 1, 2023 — for the first time in nearly three-and-one-half years since the pandemic-era payment pause began in April 2020. The reports build on the Philadelphia Fed’s previous examinations of student loan borrowers’ financial well-being during the payment pause, published in May 2022 and November 2023.

The reports draw on novel data from two consumer surveys that our Consumer Finance Institute collected during 2023. The first is a quarterly survey of more than 5,000 consumers — both those with student loans and those without — fielded in early January, April, July, and October 2023. These rich quarterly data on consumer financial well-being provide a view into student loan borrowers’ expectations and concerns regarding payments resumption beginning on October 1 and borrowers’ expected capacity to make payments once they resumed. The second data are drawn from an ad hoc survey of more than 2,000 student loan borrowers that was fielded in early November 2023 and provide a view into the actual October 2023 payment patterns of borrowers, their reasons for not making payments, their expected repayment capacity later in 2023, their awareness of and enrollment in reduced payment plans, and their anticipated budget adjustments in response to the resumption of federal student loan payments.

With the expiration of the payment pause affecting tens of millions of federal student loan borrowers in repayment, the new research will shed light on the effects of the payments resumption on student loan borrowers’ financial lives and the economy at large.

The published reports and the topics for our forthcoming reports are listed below.

Part 1: “Borrower Transitions into Student Loan Repayment: Evidence from Fall 2023 Consumer Survey Data”

January 18, 2024

This report launches our special series on student loan payments resumption and focuses on borrowers’ expectations for repayment capacity in Q4 2023, as well as providing the first view into actual payments made in October 2023 on resumed federal student loans. Our data show that most borrowers have successfully resumed payments, and most expected to continue being able to make payments through the end of 2023, without a significant burden to their overall economic outcomes or sentiment. On the other hand, there is clear evidence that borrower distress has not been eliminated by the on-ramp provided thus far, with some 22 percent of borrowers anticipating missing at least one of their scheduled payments in Q4 (11 percent expecting to miss all three scheduled payments, and another 11 percent expecting to miss at least one of the three scheduled payments). Of the borrowers who made less than their full payment in October 2023, about one-half did so because they found their scheduled payment to be unaffordable, about one-quarter experienced servicing frictions, and about one-fifth strategically skipped or postponed their payments because missed payments will not be reported until October 2024.

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Part 2: “Beyond the Minimum: Excess Student Loan Payments in Summer and Fall 2023” will consider those borrowers who reported making one-time lump-sum or excess payments in the months leading up to the expiration of the interest-free provision of the federal student loan payment pause on September 1 and the resumption of payments on October 1, 2023. This report will be released in January 2024.

Part 3: “SAVE Your Guesses: Borrower Expectations for Enrollment in the New SAVE Income-Driven Repayment Plan” will report on student loan borrowers’ awareness of and reported intention to apply for the Saving on a Valuable Education (SAVE) income-driven repayment plan. We will also provide estimates of potential payment reductions for eligible borrowers not already enrolled in SAVE. This report will be released in February 2024. 

Part 4: “Resetting Wallets: Survey Evidence on Household Budget Adjustments with Student Loan Payments Resumption” will examine student loan borrowers’ expectations for how their household budgets might adjust their earning, spending, saving, and borrowing behavior as a result of the student loan payments resumption. This report will be released in February 2024.

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