The survey revealed that a significant number of borrowers spent money they would not have otherwise, driven by the belief that at least a portion of their debt forgiveness would be forgiven.
A recent survey conducted by Intelligent.com has shed light on the financial behavior of student loan recipients who anticipated debt forgiveness under the Biden administration
In a setback for the Biden administration‘s student loan plan, the Supreme Court‘s ruling in June emphasized that the president cannot unilaterally implement debt forgiveness without Congress’ approval. The plan had aimed to provide relief to borrowers, canceling up to $10,000 in debt for most individuals and up to $20,000 for Pell Grant recipients. However, the court’s decision clarified the limitations of the president’s authority in this matter.
A recent survey revealed that the prospect of debt forgiveness had a significant impact on individuals’ spending habits. Out of the respondents, 34% admitted they would have reduced their spending if they were not reasonably confident about receiving relief through debt forgiveness. Remarkably, 75% of the participants expressed varying degrees of confidence, ranging from “somewhat” to “very,” regarding the possibility of debt forgiveness. These findings highlight the widespread reliance and belief in the potential for debt forgiveness among borrowers.
Interestingly, 5% of the total respondents claimed to have spent an additional $10,000, which corresponds to the minimum expected relief amount
Moreover, 9% stated that they had spent between $7,501 and $10,000, while 17% reported expenditures ranging from $5,001 to $7,500.
As loan payments are set to resume in October, the survey highlighted that 58% of borrowers admitted to being unprepared to resume repayment. The survey gathered responses from 977 borrowers who were eligible for the proposed debt forgiveness relief plan.