Student loan repayments will cut billions from consumer spending

by Kim Souza (ksouza@talkbusiness.net)

Financial services firm Jefferies estimates student loan payments will cost U.S. consumers $18 billion a month by September. Some economists suggest the hit to household budgets will slow a national economy already slowing due to high interest rates and inflation.

“Americans owning student loan debt will have to pull back on other things like travel and restaurant spending to fit the resumed payments into their budgets. Belt-tightening could hurt an economy that relies heavily on consumer spending,” noted Jefferies economist Thomas Simmons.

Mark Zandi, chief economist at Moody’s Investor Services, predicts student loan borrowers will face an average of $250 a month in extra payments in September when the moratorium is lifted after more than three years. He said the loan repayments reduce consumer spending and will reduce economic growth by 0.2% in the final quarter of 2023.

https://talkbusiness.net/2023/06/student-loan-repayments-will-cut-billions-from-consumer-spending/