Researchers at the Federal Reserve Bank of New York are predicting that student loan repayments won't pose a huge headwind for the economy based on a small survey of borrowers, YahooFinance.com reported. The study released Wednesday found that the restart in loan payments would reduce borrowers' spending by $1.6 billion a month, or down 0.1 percentage point from August levels. Delinquency rates would also eventually return to pre-pandemic levels. "We expect the potential spillover to the broader economy to be limited, and we will continue to monitor developments in the coming months," the researchers wrote. The findings come as retailers, borrower advocates, and others worry about the potential ramifications of repayments after a 43-month pause. The study used the SCE Household Spending Survey that the New York Fed fields every four months. In the August 2023 edition, the researchers added special questions about student loan repayments. Of the 1,000 respondents, 225 had outstanding student loans and 151 of those indicated their federal student loans were previously paused, but will be entering repayment. Pandemic forbearance gave borrowers over $260 billion in waived payments that went to other spending and savings over the last three years, the study found. After the pause, borrowers on average expect to cut back their monthly spending by $56 from their monthly average they reported in August.
