More Month than Money

The resumption of student loan payments may impact people of all ages, and may hit hardest for those with existing, complex financial obligations.

May 26, 2023


Student loan repayments are set to restart by August 29th, 2023. The resumption of student loan payments has many Americans anxious about how they are going to cover monthly costs. In a survey conducted less than a year ago, 60% of student loan borrowers stated they wouldn’t be able to afford their loan payments should they resume2. The return of student loan payments has ramifications across many layers of American society—parents who are trying to save for their children’s higher education while paying off their own, older borrowers approaching or in retirement trying to balance student loan debt with a fixed income, and current high-schoolers trying to decide if a four-year degree provides the return it once did3,4.


In March 2020, student loan payments were put on pause due to the negative financial effects of the COVID-19 pandemic. For over three years, American student loan borrowers have not been required to pay any monthly amount towards their debt (and most borrowers chose not to). Since that time, the end to this student debt forbearance has been announced, and subsequently changed, nine times. The most recent expiration date is August 29th, 2023 (at the latest—it could be sooner should SCOTUS reach a decision on potential debt cancellation before June 30th, 2023).1 This lack of clarity only further exacerbates the financial stress borrowers may be feeling.

Many borrowers—sixty percent according to one survey—indicate they will not be able to afford their payments. A full 88% of borrowers express some level of uncertainty about their ability to cover their monthly loan bill.2,5,6

Student loans are not limited to younger adults. Americans aged 30-45 owe nearly half of all student debt. Further, one percent of the US population over 60 has student loan debt. Federal borrowers aged 50-61 owe $44,031 on average.

The inability of many borrowers to pay their monthly debt is caused by several factors including increases in the cost of other debt7, inflation, and the increased cost of living. Forty-five million Americans (over 17% of the population) currently hold student loan debt.2 This means the effects of student loan debt repayment, potential delinquency and defaults, and reduced spending will have sweeping effects that go beyond just borrowers.8

Psychological Factors

There are many psychological factors and biased decision-making strategies at play when borrowers consider the uncertainty around debt repayment, increased financial constraints, and the potential inability to reach financial goals. A major one, which has been discussed in our previous posts, is emotions. In addition to these emotional responses, there are also three findings from behavioral finance that can inform clients’ behavior during this time.

Mental Accounting

Clients will treat money in different accounts differently, violating the strong economic assumption of the fungibility of funds. This means that clients may be unwilling to move money from one account (e.g., savings, usually the most sacred of all accounts) to another (e.g., spending). Therefore, clients may avoid dipping into savings to help cover their increased monthly costs. Some clients may even take out more debt to avoid touching savings or other money set aside for specific purposes.

Intertemporal Choice

Almost everybody struggles with self-control in at least one domain. Even clients who exhibit self-control around finances, may struggle with self-control around time and effort. For those who struggle to stick to a budget or save, repayment could result in increased debt and financial insecurity as these clients are unable to adjust to their reduced monthly income. Clients who struggle with procrastination or exerting costly effort may be overpaying for their debt, since enrolling in debt reduction programs requires time, diligence, and cognitive effort.9

Scarcity Mindset

One of the most interesting and impactful findings related to financial decision-making in recent years is that scarcity (defined as the gap between one’s needs and the resources they have available to meet those needs) causes a reduction in cognitive capacity (by approximately 13 IQ points). The most interesting implication of this work is that removing financial scarcity can change a person’s mindset and return them to normal levels of cognitive functioning. A scarcity mindset will change what clients notice, how they weigh their options, how they think, and what they ultimately decide. Individuals experiencing scarcity mindsets have been found to have lower self-control, lower executive functioning, less insight into their behaviors, and less concern for the future.


FPs have several tools at their disposal—each a little different depending on what a client is experiencing.
For clients with strong mental accounting, rules suggest they start a savings account now specifically for their loan payments. This allows clients to avoid the pain of violating their existing savings, while also storing up money for impending new payments. Then, when it’s time to start repayment, they feel both prepared and psychologically better for not having to disrupt any of their existing accounting rules. And, if the repayment date is pushed back further or their debt is fully or partially cancelled, they have a little extra savings.

For clients struggling with self-control, have them start building savings now—even if it’s just for the loan repayments. You can even start with a partial amount and build up until the repayment deadline. You can also research whether they qualify for continued forbearance, consolidation, income-driven repayment (IDR), or other debt relief programs. The key for these clients is taking the work out of it—do the research for them, fill out as many of the forms as you can, and make taking steps towards other options as easy as possible.

For clients with a scarcity mindset, remove as many cognitive demands as possible. For example, do not inundate them with research and resources, do not ask them to make multiple decisions, do not give them lengthy forms to complete, and do not require them to decipher new rules or legislation on their own. Instead, create simple interventions for them like setting up automatic withdrawals for savings, helping them fill out forms as much as possible, doing the research for them, providing planning prompts, and setting meetings with you in advance.

Overall, the consideration of student loan debt and the onset of additional uncertainty about financial security magnifies the need for holistic financial advice—advice that covers debt management, savings, planning, and other concerns.


Regardless of a borrower’s ability to manage the reintroduction of loan repayment, the uncertainty around timing and potential cancellation, concerns about reduced discretionary spending, and the ability to reach financial goals all increase financial stress and reduce feelings of financial security and well-being. The negative emotions and decision-making blind spots that go along with this create an opportunity for FPs to have a significant, positive impact.

How does the Atlas Point Platform help Financial Professionals

Financial Virtues and Pulse Checks invite individuals into the process and allow clients and prospects to understand if they are susceptible to any of these biases.


Download a list of Financial Virtues responses from the Atlas Point platform and identify people who may be susceptible to these biases.  Let them know you are a resource if they are feeling concerned.


If you are proactively reaching out, be mindful of how each individual prefers to receive information.  This can be found in the Financial Professional report you receive for each respondent.

Learn more
Possible preparation ideas for each Bull
  • BLUE BULLS: Be prepared with stories about how you and your clients have addressed increasingly complex needs together.
  • YELLOW BULLS: Connect recent events to their overall financial plan and previous examples of volatility.
  • ORANGE BULLS: Prepare a few bullets on how you have helped others prepare for uncertainty and what specific actions you can take together.
  • PURPLE BULLS: Align these feelings and emotions with other information or parts of their financial plan that you know the person understands.

End Notes

[1] Haverstock, E. (2023, May 19). Forgiveness, Forbearance and Other Student Loan Changes to Know. Nerdwallet.

The Administration and the Department of Education have assured borrowers this deadline will be enforced, but previous end dates were similarly emphasized. This history of backtracked timelines has only served to create uncertainty and confusion—borrowers are not only uncertain of whether their forbearance will actually end, but also whether debt cancellation will be enacted.

[2] Morning Consult. (2022). National Tracking Poll #2208182. Author.

The average borrower holds $29,000 in student debt, resulting in average payments between $200-299 per month. One percent of the US population over 60 has student loan debt. Federal borrowers aged 50-61 owe $44,031 on average. This is not a small amount for individuals on the precipice of retirement. As a result, these borrowers are contemplating whether they can retire and what that retirement will look like—paying $400-500 per month on a fixed income is not feasible for many older Americans. Student loan debt has also affected Americans aged 30-45, the age group that owes nearly half of all student debt. Many of these individuals are considering having children or already have children. That means that most student loan borrowers will soon be balancing saving for their children’s higher education costs while paying off their own.

[3] Selingo, J. & Sigelman, M. (2023, May 20). Yes, a College Degree is Still Worth It. The Wall Street Journal.

[4] The Burning Glass Institute. (2023). The Emerging Degree Reset. Author.

[5] Berman, J. (2023, May 22). After the pause: This is how borrowers are preparing for resumption of student-debt payments. MarketWatch.

This represents approximately 2% of each borrower’s discretionary income.

[6] Helhoski, A., Lane, R. & Haverstock, E. (2023, May 2). Student Loan Debt Statistics: 2023. Nerdwallet.,an%20analysis%20of%20census%20data.

Ten percent of student loan borrowers owe $80,000 or more.

While the bulk of the student loan debt is owed by those aged 35-49 ($600 billion), borrowers span all generations.

[7] Conkling, T. & Gibbs, C. (2022, Nov 2). Office of Research blog: Update on student loan borrowers during payment suspension. Consumer Financial Protection Bureau.

Forty-six percent of borrowers have seen their monthly payments on credit cards and car loans increase by at least 10%.

[8] Fidelity Investments. (2022). 2022 College Savings Indicator. Author.

In their 2022 College Savings Indicator survey, Fidelity found that 30% of parents with student loan debt have not started saving for their child(ren)’s education, and 35% of parents planning to pay for at least some of their child(ren)’s education don’t have any financial plan in place. This raises concerns about the amount of debt future generations will be saddled with, perpetuating financial insecurity and stress as a result.

[9] Turner, S. (2023, Apr 13). Student loan pause has benefitted affluent borrowers the most, others may struggle when payments resume. Brookings Institution.

There are currently several programs in place to provide relief to qualified borrowers (e.g., income-based repayment and loan forgiveness). However, the number of individuals enrolled in any of these programs has increased only minimally since the pandemic began.

[10] Mani et al. (2013). Poverty Impedes Cognitive Function. Science, 341(1), 976-980.

This is because our minds automatically orient towards our unfulfilled needs—changing how we think at a subconscious level (i.e., we don’t choose to be consumed with these needs, we just are).

Caetano, G., Patrinos, H.A., & Palacios, M. (2011). Measuring Aversion to Debt: An Experiment among Student Loan Candidates (Policy Research Working Paper No. 5737). The World Bank.

Helhoski, A. (2022, Jul 14). Can Student Loan Borrowers Handle Payments and Inflation, Too? Nerdwallet.

Lonas, L. & Gangitano, A. (2023, May 17). Pause on student loan payments about to end for millions. The Hill.

Mullainathan, S. & Shafir, E. (2013). Scarcity: Why Having So Little Means So Much. Macmillan.

Shah et al. (2012). Some Consequences of Having Too Little. Science, 338(1), 682-685.

Thornton, D. (2023, May 19). Will the Supreme Court strike down student loan forgiveness?. CNBC.