Borrowers who believed President Joe Biden’s repeated promises of student loan forgiveness were 7.5 percentage points more likely to be 90 days past due on their loans by May 2025, according to new research from the National Bureau of Economic Research. The study, co-authored by Constantine Yannelis, Dmitri Koustas, and Michael Weber, linked survey data on borrower beliefs to credit bureau records and found that optimistic borrowers reduced monthly student loan payments by $40 and increased non-durable spending by $100 per month while waiting for relief that never came. When payments resumed in October 2023 after multiple extensions of the federal payment pause, those borrowers faced a sudden financial shock and were unprepared, leading to higher delinquency rates. The researchers calculated that welfare losses from incorrect beliefs could reach up to 43% of the initial loan balance in extreme cases, or roughly $21,500 on a median $50,000 debt. Yannelis noted that the policy whiplash eroded trust in politicians and highlighted the real costs of flip-flopping on fiscal promises.