CHICAGO–Two in three consumers (65%) with a student loan said they were caught by “surprise” when the U.S. Department of Education announced this summer that student loan repayments would begin once more in October, according to a new report.
TransUnion said its Q4 2023 Consumer Pulse study found 49% of student loan borrowers expected the resumption to occur in 2024, with another 14% believing it would happen in 2025 or beyond. The Q4 2023 Consumer Pulse study is based on a survey of 3,000 American adults between Sept. 27 and Oct. 9, 2023.
“The resumption of student loan payments coincides with more Americans stating their household finances are worse than planned compared to last quarter (40% in Q4 2023 vs. 35% in Q3 2023),” TransUnion reported. “At the same time, more consumers today (31%) say their finances are better than expected versus one year earlier (23% in Q4 2022).”
Those findings largely align with a what J.D. Power discovered about Americans’ financial health in a survey of its own, as CUToday.info reported here.
Key Findings
According to TransUnion, the Consumer Pulse survey also found:
- 56% of Americans also remain optimistic about their household finances in the next 12 months, the same level observed in Q3 and higher than the 52% seen in Q4 2022
- Inflation for everyday goods is the No. 1 household financial concern, with 79% of survey respondents ranking it as one of their top three
- Additional concerns include a recession (48%), rising interest rates (44%), increased housing prices for rent or mortgage (42%), jobs (30%) and stock market volatility (30%) followed.
‘More Optimistic’
“Our newest Consumer Pulse study reveals different insights based on how the consumer sentiment data are viewed. We primarily view such data on a year-over-year basis to ensure seasonality is considered,” said Charlie Wise, senior vice president and head of global research and consulting at TransUnion. “In this regard, consumers are more optimistic about their household finances and said they are generally performing better financially than they did at the end of 2022. For this quarter, it’s clear that the resumption of student loan payments – while an obligation impacting only a fraction of US consumers – could be playing a role in limiting optimism in the short-term for some consumers.”
Additional Findings
TransUnion reported it further found among those consumers with student loans coming due this fall, 57.6% plan to make all monthly student loan payments in full, 29.6% expect to pay partial amounts and 12.8% said they do not plan on making payments.
TransUnion conducted an earlier analysis about student loan borrowers that found as of May 31, 2023, 40.6 million consumers possessed student loans, totaling $1.6 trillion in balances, of which the large majority were federal student loans that were in the pandemic-related payment moratorium. From this group, 26.8 million consumers, holding federal student loan debt totaling $1.1 trillion, were expected to be faced with a resumption of payments, some, particularly recent graduates, for the first time ever.
Millennials Powering the Way
In addition, the Consumer Pulse study found that Millennials were the generation with the most federal student loan repayments.
“Yet, this generation is the one best positioned to make these payments,” TransUnion said. “While 31% of consumers said their finances are better than expected compared to one year earlier, this percentage rocketed to 52% for the Millennial generation. Only 30% of Millennials stated their finances are worse than 12 months earlier, a net positive of 22%.
“This net positive was the highest of any generation, with Gen Z next with a net of 7% (37% better; 30% worse). Conversely, Gen X was a net negative of -26% (24% better; 50% worse) and Baby Boomers were -29% (15% better; 44% negative).”
In Better Position
TransUnion said a likely reason why Millennials are generally in a better position is that nearly seven in 10 (69%) expect income increases over the next 12 months.
“This compares to 51% for all consumers surveyed. As well, more than half of Millennials (53%) say their income is keeping up with the rate of inflation whereas Gen Z (44%), Gen X (26%) and Baby Boomers (21%) lag,” the survey found. “At the same time, Millennials are most credit hungry with 53% expecting to apply for new credit/refinance existing credit in the next year – much higher than Gen Z (44%), Gen X (31%) and Baby Boomers (10%).”
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