No matter how the U.S. Supreme Court rules on the Biden administration’s student loan forgiveness plan, millions of Americans will soon resume paying all or part of their student debt after a pause of more than three years. That will likely cause a financial “shock” to borrowers, according to one economist — and the shock could be especially jarring to Gen Z borrowers.
The resumption of student loan payments, which will likely come this summer, could create risks similar to the 2013 fiscal cliff, Jefferies economist Thomas Simons wrote in a note. Back then, tax increases led to reduced consumer spending.
“The end of the moratorium is going to be a shock to a significant number of household budgets,” Simons wrote. “Households have already been eating into their excess savings to maintain their preferred consumption in the face of high inflation.”
