Joe Biden's repeated student debt forgiveness promises were tied to worse loan performance by May 2025, according to a new National Bureau of Economic Research study. Borrowers who believed relief was coming were 7.5 percentage points more likely to be 90 days past due, after years of extensions and a resumed payment clock.
The paper tracked borrower beliefs from 2022 through mid-2025 and linked survey data to credit bureau records and consumption data. Constantine Yannelis, a University of Cambridge economist and co-author, said there are very real costs for consumers when politicians flip-flop.
August 2022 Promise
In August 2022, Biden said the federal student loan payment pause would be extended one final time. His executive order also promised $10,000 in relief for most borrowers and $20,000 for Pell Grant recipients. The Supreme Court later blocked the plan in June 2023.
By June, the payment pause had already been extended seven times. Payments then resumed in October 2023, after borrowers had spent years trying to infer whether forgiveness would arrive or whether repayment would restart on schedule.
Borrower Behavior
Yannelis said borrowers who expected forgiveness changed how they handled monthly bills before the restart. Those who were optimistic about cancellation reduced their monthly student loan payments by $40 and increased non-durable spending by $100 per month.
Some borrowers acted as if the August 2022 extension was truly the last one. Others stopped paying and spent more because they expected relief. That split in behavior is what the study ties to later delinquency.
Delinquency By May 2025
By May 2025, borrowers who believed Biden's promises of relief were 7.5 percentage points more likely to be 90 days past due on their loans. Yannelis said, “A lot of people who thought they would get forgiveness and didn’t ended up becoming delinquent on their loans.” He added, “They didn’t plan ahead, they probably made other spending commitments, and we actually saw them defaulting.”
He also said, “If consumers take actions based on beliefs that are not actually true because of mistaken policy promises, they may engage in financial planning that actually turns out not to be in their best interest.” For borrowers still carrying student debt, the practical takeaway is narrow but direct: expectations of relief changed behavior for years, and the repayment restart exposed the cost.
