Student Loan Repayment To Resume, But Few Know What They Owe

Given that millions of federal student loan holders have not had to pay back their debts since the government frozen repayments in March 2020, it is not surprising that some borrowers have lost track of their repayment status. Worryingly, however, most do not know the basic details of their debts and may be unprepared when the bills resume in the next year.

According to our new survey of 1,020 Americans with student loans, approximately 56% of borrowers don’t know about their balance and 55% don’t know the end date of their debt.

In fact, many respondents had potentially negative misconceptions about student loan waivers and student loan refinancing eligibility – and in many ways, borrowers who identified themselves as female were more at a disadvantage than their male counterparts for information about their debts.

Main results

  • Besides that, many borrowers don’t care about their balance and their repayment horizon have no idea what type of amortization plan they use (26%) don’t know the name of your student loan broker (22%) and couldn’t quote their own Interest rate (21%). (Continue reading)
  • Men say they know more about their student loans than women when it comes to loan details like balance, interest rate, loan type and repayment schedule. However, borrowers who identify as female will be more aware of loan waiver and refinancing eligibility. (Continue reading)
  • Given the ongoing nationwide discussion of student loan facilitation, 58% of respondents (and 68% of those who have personal loans) mistakenly believe that everyone is entitled to student loan waiver according to proposals currently under consideration by Congress and the White House. There are also 79% of private borrowers mistakenly believe they are eligible for existing federal lending programssuch as Public Service Loan Forgiveness (PSLF). (Continue reading)

Borrowers do not yet know the details of their educational debt

Previous Student Loan Hero surveys (2018 and 2019) show that misunderstandings about student borrowing start in college. For example, recent students have reported not knowing their interest rates or not knowing how interest rates work.

With that in mind, it’s no surprise that borrowers of all ages are still unclear on the basics, from their balance and loan term to their repayment schedule and rate, as well as federal loan service provider. (We’re actually seeing a dramatic increase in borrowers worried about the identity of their loan service provider as a handful of federal contracts will expire by the end of 2021.)

For example, on the subject of annual interest rates (APRs) – the annual cost of interest rates and fees – almost one in four respondents (24%) said they didn’t know whether their loan had a fixed or floating rate. This is worrying as floating rates change based on market forces and usually result in fluctuating monthly payments that can ruin (or sometimes save) a family’s monthly budget.

Also on the alarming side of our results: 12% of borrowers don’t know what kind of government or private student loans they have. This lack of information could also prove costly as different loans come with different guarantees. Only federal student loans are likely to be eligible for certain aid programs.

Male borrowers are more likely to know their loans

Previous studies by Student Loan Hero show that men are more likely to show financial confidence when it comes to money, such as negotiating a job raise or prospecting their educational debt.

This trust could help explain why male-identified borrowers say they know more about their loans than their female counterparts.

Note, however, that the survey did not go so far as to conclude whether men were actually know more about their loans than women. In fact, it turned out that women are smarter than men when it comes to ignoring myths about eligibility for credit relief and student loan refinancing.

Private student loan borrowers have misconceptions about forgiveness

Student loan relief has been a constant in the headlines, especially as the COVID-19 pandemic resulted in more borrowers struggling with their monthly fees. Unfortunately, these headlines often lack context, leading to widespread myths about student loan forgiveness.

Apart from the fact that the majority of government and private borrowers believe that mass forgiveness proposals would help 100% of borrowers, it will not. While 8 in 10 of private borrowers think they are eligible for existing government debt relief programs, they will not.

In reality, state lending programs are limited to state borrowers, although private borrowers may have access to state and employer loan repayment programs.

At the same time, around 1 in 3 respondents (35%) said they were unaware that Congress recently made student loan issuance tax-free. (Note, however, that many forms of forgiveness will become taxable again in 2026.)

An even larger cohort believed that borrowers never had to pay taxes on waived debts (36%), a dangerous assumption given that some of those who have received waivers in the past have faced heavy tax bills.

What you don’t know about your student loan debt can cost you

It’s easy to get lost in the student loan world, which is perhaps why 11% of borrowers were at least 90 days in arrears on their debts according to our student loan debt stats before the coronavirus pandemic started.

Unfortunately, if you don’t know the details of your debt – and your repayment options – it can be very costly.

In addition to the misconceptions about loan relief, there is also a common misconception about student loan refinancing. Almost a third of our respondents (32%) believed that only private borrowers were eligible for refinancing. And another third (34%) said they didn’t know.

This is a potentially costly mistake as refinancing student loans can potentially lower your interest rate (save money) and / or lower your monthly payment amount (save stress).

However, refinancing is not the right move for many borrowers, including federal student loan borrowers who enjoy the prolonged repayment suspension and have access to government protections such as public service loans and income-driven repayment (IDR).

Whether refinancing, interest or forgiveness options, a little knowledge sometimes brings additional money into your pocket.

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