Waiting On Biden’s Student Loan Forgiveness Cost Borrowers Up To 43%, NBER Finds

Borrowers who believed the student loan payment pause would keep getting extended (or that their debt would be forgiven outright) cut their payments, spent more, and are now more likely to be delinquent, according to a new National Bureau of Economic Research working paper.

Economists surveyed borrowers about their expectations during the pause and the 2022 forgiveness announcement, then linked those responses to credit bureau, employment, and spending data.

The key finding: policy uncertainty itself changed borrower behavior, and the costs are still showing up in student loan debt statistics today.