That flip-flopping forced American federal student loan holders to go through a rollercoaster of emotions at the time, and now, researchers have put a real financial cost to it too.

Borrowers who believed Biden’s repeated promises of relief 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 finding, drawn from a study linking survey data on borrower beliefs to credit bureau records, puts a precise number on the financial damage inflicted by years of government policy whiplash on student debt.

“There are very real costs for consumers of politicians flip-flopping,” said Constantine Yannelis, an economist at the University of Cambridge and one of the paper’s co-authors. “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.”

The paper, co-authored with Dmitri Koustas and Michael Weber, tracked borrowers’ beliefs about forgiveness from 2022 through mid-2025, linking survey responses to credit bureau records and consumption data. What it found was a direct pipeline from political promise to financial harm: Borrowers who expected forgiveness stopped making payments, increased spending, and were wholly unprepared when the bill finally came due.

“A lot of people who thought they would get forgiveness and didn’t ended up becoming delinquent on their loans,” Yannelis told Fortune. “They didn’t plan ahead, they probably made other spending commitments, and we actually saw them defaulting.”

Borrowers who were optimistic of future loan forgiveness reduced their monthly student loan payments by $40 and increased non-durable spending by $100 per month—essentially spending money they hadn’t yet saved. Many stretched into longer repayment terms to minimize payments while waiting for relief that never came. When payments resumed and forgiveness didn’t materialize, those borrowers faced a sudden financial shock they hadn’t planned for.

“Once the payments resume, they’re suddenly hit with this major financial shock,” Yannelis said. “If you were forward-looking and knew that you had that cost, you would plan ahead for it.”

The pattern accelerated with each extension. Biden’s August 2022 executive order—which promised $10,000 in relief for most borrowers and $20,000 for Pell Grant recipients—was announced just months before the midterm elections, then blocked by the Supreme Court in June 2023. But by that point, the payment pause had already been extended seven times, and borrowers had learned a lesson: When Biden said “final,” he didn’t mean it.

“If you tell the kids you get another half hour before bedtime, they think they’ll stay up all night,” Yannelis said. “But at some point the administration changed, and there was a real policy change.”

The delinquency data reflects that moment. Borrowers most optimistic about further extensions were the ones least prepared when the Trump administration held the line on repayment—and when it announced defaulted loans would move to collections, a policy that triggered significant backlash. The chaotic return of payments was marked by servicer errors, miscalculated bills, and widespread non-payment from the start.

The damage extended beyond missed payments. More optimistic borrowers increased spending on durable goods—including cars and, in some cases, homes—while waiting for loan forgiveness that never arrived. The researchers calculated welfare losses from incorrect beliefs could potentially reach up to 43% of the initial loan balance in the most extreme cases, translating to roughly $21,500 on the median borrower’s $50,000 in debt.

Losing trust in politicians

Yannelis said all of this flip-flopping caused people to lose trust in politicians—especially when trust was already low to begin with. This, he said, translates to even current-day issues, like Social Security, whose trust fund is now projected to be depleted by 2032 for the retirement fund. That would trigger automatic cuts of up to 24% for retirees, something most future recipients either don’t know or don’t believe will result in the benefit cuts current law would require.

“There would be large benefits to consumers if politicians could give more clear guidance about fiscal policy,” Yannelis said. “To the extent that there could be more forward guidance, that would allow consumers to make plans about their lives.”

The research adds a behavioral economics dimension to a debate that has largely focused on the fairness and fiscal cost of forgiveness itself. Whatever one thinks of the merits of canceling student debt, the paper suggests, the cost of promising it and then failing to deliver may rival the cost of the policy itself.

“The timing of the announcement of student loan forgiveness that was blocked by courts—it wasn’t random,” Yannelis said. “You often see politicians offering things like stimulus checks right before elections.”