Many Student Loan Borrowers Will Need Help When Federal Pause Ends, Survey Shows

With the payment moratorium on federal student loans set to expire Sept. 30, two-thirds (67%) of borrowers responding to a survey this spring said it would be difficult for them to afford payments if they resumed the following month.

As the COVID-19 pandemic took hold in March 2020, the federal government moved to pause payments and interest charges for most borrowers and suspend collection efforts for those in default. Policymakers acted initially through the Coronavirus Aid, Relief, and Economic Security (CARES) Act; the pause has since been renewed in a series of executive orders. Once it ends, borrowers will have to simultaneously navigate a confusing repayment system and any household financial challenges.

The survey, which the opinion and market research company SSRS conducted in May and June for The Pew Charitable Trusts, highlights borrowers’ awareness of the pause and its eventual end, plus any steps they might have taken to help ease the resumption of payments.

The survey found that:

• 78% of borrowers said they had heard about the temporary payment pause.
• 81% of those who knew about it said they believed the protections applied to them.
• 63% of borrowers affected said they had been contacted by the U.S. Department of Education or a loan servicer about actions they could take during the pause, such as continuing to make payments, updating payment amounts, or changing repayment plans.
• 31% of those affected said they had enrolled in different repayment plans, consolidated their loans, continued making payments, or worked to get their loans out of default during the pause.
• And 52% of those affected by the pause said they were unsure when they would be required to resume payments.

These topline findings indicate that many borrowers will need assistance from the Education Department and from loan servicers to make a successful transition back into repayment. In the coming months, Pew will release additional findings from the survey, including details on borrowers’ assessments of their financial security and their interactions with the repayment system during the pause, as well as the financial resources of current students.

In a separate Pew survey last summer, many borrowers said they had faced significant financial challenges during the pandemic-induced economic downturn. Pew’s project on student borrower success has recommended several policy updates to help these borrowers—especially those at risk of delinquency and default—transition successfully into repayment. To start, the department should:

• Identify borrowers who were at risk of default before the pause and reach out to them before repayment restarts to discuss their options for successful resumption of payments.
• Streamline the paperwork requirements for income-driven repayment plans—which tie monthly payments to family size and income—before the restart so that borrowers can easily transition to options that often are more affordable.
• Provide a short grace period for those who struggle to make monthly payments after repayment resumes.

These actions could help reduce the administrative barriers to a successful restart that are highlighted in borrowers’ survey responses. They also could help ensure the readiness of student loan servicers—who also experienced coronavirus-related disruptions—to provide assistance to their customers.

This survey was conducted for The Pew Charitable Trusts by SSRS through the online SSRS Opinion Panel. Interviews were conducted May 10 through June 16, 2021, among a representative sample of 2,806 total respondents. The margin of error with design effect for all respondents is plus or minus 3 percentage points at the 95% confidence level.

Travis Plunkett is the senior director of the family economic stability portfolio, Regan Fitzgerald is a manager and Lexi West is a senior associate with The Pew Charitable Trusts’ project on student borrower success.

Editor's note: This analysis was updated July 16, 2021, to correct the percentage of borrowers affected by the repayment pause who said they were unsure when they would be required to resume payments. The correct share is 52%.