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Nearly 40 million Americans will resume payments on close to $1.1 trillion of federal student loans on October 1, after a pandemic-era three-year pause enacted by the Education Department.
Interest on student loans began accruing again on September 1 after being halted in March of 2020.
Economists are divided over the effect the resumption of these repayments will have on consumer confidence.
Some expect the $200 to $600 monthly payments will result in "payment shock" that will alter the recent buying patterns that kept the U.S. economy steady. Others say that the resumption of payments is barely a drop in the bucket compared to overall annual consumer spending of $18 trillion in the United States.
However, close to $100 billion annually is expected to be rerouted from consumer discretionary spending on everything from clothing to new homes back to student loan repayments.
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The Biden administration introduced a new repayment plan known as SAVE (Saving on a Valuable Education) that already has more than 4 million enrollees hoping to lower their monthly payments.
The U.S. Supreme Court in June ended the Biden administration's program to cancel up to $20,000 in student loan debt for millions of individuals, ruling that the administration had overstepped its authority.
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Copyright © 2023 CGTN. 京ICP备16065310号
Disinformation report hotline: 010-85061466