About four in ten U.S. student-loan borrowers who had to resume payments last year said they cut spending on other things as their main response, according to a University of Michigan survey, Bloomberg News reported. The resumption of payments in October affected about 15% of all U.S. consumers. Out of that group, the biggest share — around 40% — said they mostly adapted by spending less, according to the study. Roughly 30% said they responded by saving less, and 20% said they borrowed more. The numbers show that only a relatively small share of U.S. households trimmed outlays to cope with student debt payments — one reason why the economy was able to power ahead in the fourth quarter of last year, even as the bills were coming due again after a 3 1/2-year pandemic freeze. The UMich data shows that more financially vulnerable borrowers “have resorted to spending on additional credit to maintain their spending,” which could add to the uptick in consumer-credit delinquencies observed last year, said Joanne Hsu, director of the survey. But she said that group is small enough that “any increase in financial systemic risk that might arise is unlikely to be substantial.” The UMich survey was conducted between late September and mid-January among 2,242 respondents.
