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$415 billion in student loan debt may not get paid

13 million Americans say they can't afford the repayments.

The Federal government could be losing out on roughly $415 billion in student repayments, with 24% of survey respondents saying they don’t plan on paying back their student loans when repayments resumed in October 2023, according to the latest Finder Consumer Confidence Index survey.

Approximately 13 million adults, 30% of student loan borrowers, also say they cannot afford to pay back their loans when student loan repayments resume.

Let’s dive a little deeper.

Will you be able to afford your federal payments when they resume?

Less than one in five borrowers (24%) say they can make their repayments without it affecting their lifestyle. A quarter (25%) of borrowers say they can afford their repayments, but it will force them to cut back on their spending a little. While 20% say they can afford to service their student loan debt, making those payments will drastically affect their budgets.

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Do you plan on making your repayments?

About one in four, or 10 million borrowers, say they will not be paying their student loans when repayments resume.

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As it stands, there is roughly $1.73 trillion in outstanding student loans across the various loan types. With 24% of respondents saying they won’t make their payments, borrowers will refuse to repay roughly $415 billion in student loan debt. To put that in content, $415 billion is higher than the GDP of more than 140 nations including Denmark, Finland and Iraq.(1)

Over half of women say they will be negatively impacted once repayments resume

Men (34%) are more likely than women (20%) to say they can afford their student loan payments when they resume. The same amount of women and men (30%) say they cannot pay back their loans.

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While women will struggle more to make their student loan payments, women (22%) are less likely to say they don’t plan on paying back their student loans than men (27%).

Nearly half of gen X won’t be able to meet their repayment obligations

Roughly half (47%) of gen X say they cannot afford their federal student loan payments when they resume, along with over a quarter (26%) of millennials.

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Gen X is also the largest cohort saying they don’t plan on repaying their loan at 25%.

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The South most likely to skip out on student loan debt

Over a third (35%) of those living in the South with student loan debt say they can’t afford to meet their payment obligations, and over a quarter (26%) say they don’t plan on paying back their loan.

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When do Federal student loan payments resume?

For those with outstanding student loans, they start accruing interest on September 1, with loan repayments to begin in October 2023. There is a one-year leniency program that will begin on October 1, 2023, and end on September 30, 2024, according to CBS(2).

More than a few borrowers were in for a rude shock last fall, with less than a third (30%) knowing when repayments are set to resume, according to a US News poll(3).

State of student loan debt in the US

As it stands, in Q3 2023, there is about $1.73 trillion in outstanding Federal student loan debt, an increase of roughly 41% from the $1.23 trillion in Q3 of 2014(4).

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What happens if you don’t pay student loans?

Deciding not to repay your student loans can be extremely detrimental to your personal finances. Not only will delinquent payments be reported to the credit bureaus, negatively impacting your credit score, you’ll also get hit with late fees and run the risk of loan acceleration, which is when you’re required to repay your loan, in full plus any interest you’ve accrued.(5)

Other negative outcomes may include a lawsuit for unpaid debt, which could result in wage, tax refund and government benefit garnishing. It’s also worth pointing out that you can’t discharge student loans in bankruptcy, so your only real choice is set up a payment plan to avoid default.

Rather than not paying your loans, you should look into all the options available to you including the Government’s Fresh Start Program, which offers special benefits for borrowers with defaulted federal student loans.

You may also want to look at refinancing your student loans. Doing so does come with both pros and cons. While refinancing your student loan can help you save money if you’re offered a lower rate, choosing to go with a private lender means you will no longer have access to government programs.

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To make sure you get accurate and helpful information, this guide has been edited by Holly Jennings as part of our fact-checking process.
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Lead Editor & Insights Editor

Richard Laycock is Finder’s NYC-based lead editor & insights editor, spending the last decade data diving, writing and editing articles about all things personal finance. His musings can be found across the web including on NASDAQ, MoneyMag, Yahoo Finance and Travel Weekly. Richard studied Media at Macquarie University, including a semester abroad at The Missouri School of Journalism (MIZZOU). See full bio

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