The restart of student-loan payments could divert up to $100 billion from Americans’ pockets over the coming year, leaving consumers squeezed and some of the nation’s largest retailers fearing a spending slowdown, the Wall Street Journal reported. Starting Oct. 1, tens of millions of student-loan borrowers will need to make payments averaging between $200 and $300 each month. The payments will mark the first time that borrowers have had to make good on their loans since the Education Department instituted a pause in March 2020. In the interim, they spent the money on televisions, travel, new homes and thousands of other products. That spending is one reason the economy has remained resilient in recent years, despite a surge in interest rates. What the resumption of loan payments means for the broader economy, however, is up for debate, and at least two groups watching closely disagree. Target, Walmart and other retailers that depend on discretionary spending are concerned. Economists, on the other hand, say the renewed payments are a relatively small problem for the more than $18 trillion in annual U.S. consumer spending. Inside Americans’ homes, the debate doesn’t matter. Borrowers say they are curtailing their spending in meaningful ways. Making the payments will add another financial obligation to rising credit-card bills, gasoline prices and other costs, and they say uncomfortable cuts will be necessary.
