Borrowers could opt for an income-based plan, deferral, or their normal monthly bill, but some don't have a plan at all, per a Bankrate survey.
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The student-loan industry is getting a shock to its system in two months when millions of borrowers will have to restart monthly payments after what will be a nearly two-year pause.
While many of those borrowers do not believe they can afford those payments, new data found some of them don't even have a plan to tackle the quickly approaching repayment deadline.
Bankrate — a consumer financial services company — released a survey on Monday that found 18%, or one in five borrowers, do not have a plan to restart paying off their student debt on February 1. Of the 4,773 adults surveyed, 31% are choosing to continue with a normal repayment plan, 29% are enrolling in an income-driven repayment plan, and 16% will apply to defer their student loans until they have the means to afford payments.
"It's encouraging that most borrowers have already considered strategies for resuming payments in anticipation of deferment ending," Melissa Venable, online education advisor for BestColleges.com, said in a statement. "For those that haven't, the good news is that there is time to speak with their federal student loan servicer to discuss options and avoid missed payments. Unfortunately, student loans are a hardship for many, and those who become delinquent face myriad of additional financial challenges."
Those challenges that Venable mentioned can be significant. As Insider previously reported, falling behind on payments can have a negative impact on borrowers' credit scores, causing wages to be garnished and federal benefits like child tax credits to be seized, also making it sometimes impossible for mortgages and other types of loans to be taken out until the borrower returns to good standing.
The survey also reflected other challenges many borrowers will be facing in two months. According to the results, 75% of respondents reported that some aspect of their finances will be negatively impacted when payments resume — 43% said their abilities to save for retirement will be compromised, 39% said the same about their discretionary income, and 36% anticipate their abilities to afford day-t0-day essentials will take a hit.
Stress leading up to February 1, when student-loan payments resume, has been mounting for months. The Student Debt Crisis Center recently released a report that found 89% of borrowers with full-time jobs do not feel financially secure enough to resume paying off their debt. That's because for 27% of them, one-third of their incomes will go toward paying off that debt, which is money they have been using for other purposes during the pandemic.
Alexandria Mavin, a 32-year-old student-loan borrower with $117,000 in debt, previously told Insider the pandemic payment pause saved her $377 a month, which allowed her to pay off her medical bills from having a baby in full.
"It just shows how without student loans, I can afford life," Mavin said.
The Education Department is reportedly considering a "safety net" to ease borrowers back into repayment, but it has yet to release specific details on those plans.
