diff --git a/awx/api/views.py b/awx/api/views.py
index 934c822f76..f5fdcf6eb2 100644
--- a/awx/api/views.py
+++ b/awx/api/views.py
@@ -2941,9 +2941,15 @@ class JobTemplateSurveySpec(GenericAPIView):
                         question_position=str(idx), question_type=survey_item["type"])
                     ), status=status.HTTP_400_BAD_REQUEST)
                 old_element = old_spec_dict.get(survey_item['variable'], {})
-                if (survey_item['variable'] not in old_spec_dict or 'default' not in old_element or
-                        not old_element['default'].startswith('$encrypted$') or
-                        old_element['default'] == '$encrypted$'):
+                encryptedish_default_exists = False
+                if 'default' in old_element:
+                    old_default = old_element['default']
+                    if isinstance(old_default, six.string_types):
+                        if old_default.startswith('$encrypted$'):
+                            encryptedish_default_exists = True
+                        elif old_default == "":  # unencrypted blank string is allowed as DB value as special case
+                            encryptedish_default_exists = True
+                if not encryptedish_default_exists:
                     return Response(dict(error=_(
                         "$encrypted$ is a reserved keyword, may not be used for new default in position {question_position}."
                     ).format(question_position=str(idx))), status=status.HTTP_400_BAD_REQUEST)
diff --git a/awx/main/tests/unit/api/test_views.py b/awx/main/tests/unit/api/test_views.py
index 10edba02cb..0ad395f296 100644
--- a/awx/main/tests/unit/api/test_views.py
+++ b/awx/main/tests/unit/api/test_views.py
@@ -302,7 +302,7 @@ class TestSurveySpecValidation:
                 {
                     "question_description": "",
                     "min": 0,
-                    "default": "$encrypted$foooooooo",
+                    "default": "$encrypted$foooooooo",  # default remained the same
                     "max": 1024,
                     "required": False,  # only thing changed
                     "choices": "",
@@ -312,3 +312,49 @@ class TestSurveySpecValidation:
                 }
             ]
         }
+
+    def test_use_saved_empty_string_default(self):
+        '''
+        Save is allowed, the $encrypted$ replacement is done with empty string
+        The empty string value for default is unencrypted,
+        unlike all other password questions
+        '''
+        view = JobTemplateSurveySpec()
+        old = {
+            "name": "old survey",
+            "description": "foobar",
+            "spec": [
+                {
+                    "question_description": "",
+                    "min": 0,
+                    "default": "",
+                    "max": 1024,
+                    "required": True,
+                    "choices": "",
+                    "variable": "openshift_username",
+                    "question_name": "OpenShift Username",
+                    "type": "password"
+                }
+            ]
+        }
+        new = deepcopy(old)
+        new['spec'][0]['default'] = '$encrypted$'
+        resp = view._validate_spec_data(new, old)
+        assert resp is None
+        assert new == {
+            "name": "old survey",
+            "description": "foobar",
+            "spec": [
+                {
+                    "question_description": "",
+                    "min": 0,
+                    "default": "",  # still has old unencrypted default
+                    "max": 1024,
+                    "required": True,
+                    "choices": "",
+                    "variable": "openshift_username",
+                    "question_name": "OpenShift Username",
+                    "type": "password"
+                }
+            ]
+        }