Hanover Advisors Inc.
08/07/2024 | News release | Archived content
Nearly Half of Student Loan Borrowers Expect Debt Forgiveness
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Nearly Half of Student Loan Borrowers Expect Debt Forgiveness
August 7, 2024
America's collective student debt burden has grown to more than $1.6 trillion, and nearly half of student borrowers are expecting not to have to pay back their loans.
Sallie Mae's latest How America Pays for College report found that nearly half, 48%, of student loan borrowers say they expect to receive loan forgiveness in the future.
While there are ample opportunities for loan forgiveness, students and their families should not be making borrowing decisions based on the assumption that debt will be forgiven. Existing relief options can be arduous, narrowly defining forgiveness based on career requirements and income limitations. Attempts at the sort of widespread loan forgiveness that many are anticipating have faced several legal challenges.
Students taking out student loans should be prudent about what they will be able to repay and limit any borrowing to what is strictly needed. Perhaps in anticipation that loans will be forgiven, student borrowers are taking out larger and larger amounts of debt.
As of the second quarter of 2024, 2.4 million borrowers carried a federal student loan balance between $100,000 and $200,000, according to the Department of Education. That is up significantly from 2017, when just 1.8 million borrowers had similar balances. Even more worrying, more than 1 million borrowers have a student loan balance above $200,000, up from 600,000 individuals in the same time frame. Those figures do not include private borrowers, which, because of the higher interest rates associated with private lending, may even be significantly higher.
As the cost of higher education continues to climb, so too will student loan balances, but it is important for borrowers not to take more than they need, and more importantly, more than they will be able to pay off. A good rule of thumb for student borrowers is to not borrow more than you anticipate making in your first year of post-college work.