Ever since President Biden released his plan to cancel up to $20k of student loans for some borrowers, it’s been a rollercoaster.
As of now, repayments remain paused, but several court cases are blocking the implementation of the plan. On February 28th, the justices are hearing arguments for two of those cases.
As a money app, we know this impact is going to be felt by members of the Cleo community, who are already working hard to make it to the next paycheck, keep their spending habits in check, and/or are diligently saving their money.
To understand how the student loan repayment pause ending and the potential reversal of loan forgiveness could impact people, from Gen Z to Boomers, Cleo sent out a survey to 1,003 Americans between 18-65 years old in February 2023.
Here are the main takeaways:
- 46% of people say that their mental health will be affected the most if student loans are not reversed.
- 55% of student loan borrowers will need to take a second job to help with repayments, with 26% of people saying they need to work an extra 11-30 hours per week and 18% saying they need to take on an extra 1-10 hours per week.
- When student loan repayment resumes, the number one action that people will have to take is to make cuts on essentials, such as groceries, gas, and utilities (28%). This is followed by making cuts on luxuries (24%) and going into debt through credit cards or cash advances (24%).
- Savings (emergency fund/savings account), credit card debt, and a personal line of credit are the top 3 financial products that people would consider using to help repay their student loans.
- A whopping 61% of people are either unsure (41%) or have confirmed (20%) that they will not be able to afford their monthly loan payments.
“The financial anxiety and mental health issues that come with having student loan debt hanging over your head is hard to remedy, especially when we’re seeing people talk about making cuts on living essentials and taking out even more credit to cover loan repayments as our survey indicates,” says Kimberly Dillon, vice president of brand at Cleo.
“What’s missing in the journey to becoming debt-free is budgeting and financial coaching tools that are personalized to your specific needs.”
To help those struggling with mental health challenges due to the potential of a student loan repayment reversal, having to resume repayments, or just the sheer amount of student loans owed, Cleo is launching the “Student Loan Support Mode” to:
- Provide mental health advice
- Help you set up savings and budgeting plans
- Send good vibes and energy your way
Download Cleo for free on the Apple Store or Google Play Store, connect your bank account, and type “student loan support” in the chat tab.
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Big love. Cleo 💙