Americans Prepare for Tighter Budgets as Student Loan Payments Resume
Borrowers cutting discretionary spending will hit consumption, crimping growth.
John McCullough at his home in Alexandria, Virginia.
Photographer: Jared Soares for Bloomberg Businessweek
The restart of federal student loan payments this fall will be a renewed burden for millions of borrowers and another headwind for a US economy that’s losing momentum.
The Biden administration agreed not to extend the three-year moratorium on payments as part of the debt ceiling deal it cut with Republicans, so the almost 27 million borrowers who have a total of $1.1 trillion in student loans in forbearance will need to resume servicing them starting on Oct. 1. The US Supreme Court threw out the president’s plan to forgive up to $20,000 per borrower on June 30, closing down another potential avenue for relief for those who qualified.