1 in 5 student debt borrowers have made zero payments, report shows

Almost five months after the "student debt strike,” many student loan borrowers are still steering away from making payments.

According to Intuit Credit Karma, 1 in 5 student loans borrowers have failed to make a single payment on their student loans. The share jumps to 27% for those with less than $50,000 in household income.

Reason? Borrowers are simply waiting for Uncle Sam's blank check. They want to qualify for government relief programs before committing to a repayment plan.

For example, 40% of borrowers said they make too much money to qualify for the SAVE plan but don’t make enough to afford loan payments.

Meanwhile, 63% of borrowers reported falling behind or being inconsistent in their payments.

As Creditnews reported, millions of Americans stopped budgeting for student loan payments during the three-year pandemic-era moratorium. When payments resumed last fall, many were unprepared to meet their debt obligations.

In the meantime, the Biden administration has canceled $167 billion in federal student loans.

With the Biden administration’s additional debt relief measures in limbo, “more borrowers face uncertainty as to whether or not they will benefit from lower monthly payments and a clear path to loan forgiveness,” said Intuit Credit Karma’s Courtney Alev.

Alev recommended that student loan borrowers “not put all their eggs” in the loan-forgiveness basket.

SAVE Plan uncertainty

Borrowers seeking clarity on the status of their student loans could be stuck in limbo well into 2025.

As reported by Forbes, at least 8 million borrowers are currently in forbearance, and millions more don’t know if they’ll become eligible for forgiveness.

This cloud of uncertainty is the result of multiple legal challenges from Republican lawmakers who believe Biden’s debt relief measures are unconstitutional.

According to News Nation, two groups of GOP state attorneys general have challenged the debt relief plan. Meanwhile, the states of Texas, South Carolina, and Alaska have asked their justices to reinstate rulings that would block portions of the plan.

In August, the Supreme Court upheld a lower court’s ruling to halt all debt relief efforts while the legal challenges proceed.

The Biden administration’s proposed relief measures include a combination of debt cancellation, payment reductions, and shortening the repayment period to be eligible for forgiveness.

“Our Administration will continue to aggressively defend the SAVE Plan—which has helped over 8 million borrowers access lower monthly payments, including 4.5 million borrowers who have had a zero dollar payment each month,” said White House spokesperson Angelo Fernández Hernández.

“[W]e won’t stop fighting against Republican elected officials’ efforts to raise costs on millions of their own constituents’ student loan payments,” said Hernández.

According to the latest data, Americans collectively owed $1.74 trillion in student loans, of which federal student loans accounted for 91.2%. More than half (53%) of the borrowers owe at least $20,000.

Nearly half (47%) of the total federal student loan debt is held by just 10% of borrowers, who owe at least $80,000.