Two weeks ago, in "The Great Student Loan Nonpayment Boondoggle Is Over And Household Spending Is About To Collapse", we showed how the three year-long payment forbearance had artificially boosted disposable incomes by tens of billions. And, more importantly, with repayment on said loans set to resume in a few months, personal spending was set to collapse.

Today, in a note from Barclays economist Adirenne Yih (available to pro subscribers in the usual place), the bank has published a detailed calculation of just how much disposable spending would shrink by as a result of the student loan payment restart. In a nutshell, the bank estimates a potential aggregate $15.8bn monthly headwind - or $190 billion per year - to US spending as the average student debt holder sees an incremental monthly payment of ~$390 beginning this fall.

This represents an ~8% headwind to monthly personal income, affecting 16% of the US population, and adding pressure to not just consumer discretionary and apparel, but all retail spending.
For those who missed it the first time, here is the background:

Quote:

---

Student loan payments are set to resume in the coming months. For more than 40 million Americans carrying student loan debt, the timeline to resume making payments is now on the horizon. The debt ceiling deal passed earlier this month paves the way for student loan payments to resume as early as August 29, 2023, per the latest update from the U.S. Department f Education: Federal Student Aid. For most, this will be the first time making payments since the early days of the pandemic in March 2020

---

That'll calm down the inflation!

Win, win

My car note represents about the same headwind on my budget - but I don't see anyone wanting to forgive me on that payment.

That's not going to happen. Biden will pause them again.

He'll get sued for breaking the law and it'll take until after the election to be resolved.

Logos Stick said:

---

That's not going to happen. Biden will pause them again.

He'll get sued for breaking the law and it'll take until after the election to be resolved.

---

Not if SCOTUS rules he cant

Ezra Brooks said:

---

My car note represents about the same headwind on my budget - but I don't see anyone wanting to forgive me on that payment.

---

Give it time

Maroon Dawn said:

---

Logos Stick said:

---

That's not going to happen. Biden will pause them again.

He'll get sued for breaking the law and it'll take until after the election to be resolved.

---

Not if SCOTUS rules he cant

---

They will rule that, but it has to make its way through the courts. That's the strategy.

At least the book value of those loans in financial institutions will resume something closer to a reality versus an accounting fiction.

Logos Stick said:

---

Maroon Dawn said:

---

Logos Stick said:

---

That's not going to happen. Biden will pause them again.

He'll get sued for breaking the law and it'll take until after the election to be resolved.

---

Not if SCOTUS rules he cant

---

They will rule that, but it has to make its way through the courts. That's the strategy.

---

Aren't they set to rule on this shortly?

Ezra Brooks said:

---

My car note represents about the same headwind on my budget - but I don't see anyone wanting to forgive me on that payment.

---

And when you can't pay it, it can be discharged in a bankruptcy as well. Make student loans the same as every other investment related loan, and the comparison is valid.

Maroon Dawn said:

---

Logos Stick said:

---

Maroon Dawn said:

---

Logos Stick said:

---

That's not going to happen. Biden will pause them again.

He'll get sued for breaking the law and it'll take until after the election to be resolved.

---

Not if SCOTUS rules he cant

---

They will rule that, but it has to make its way through the courts. That's the strategy.

---

Aren't they set to rule on this shortly?

---

I think that is the forgiveness crap he did, not the pause. I could be wrong though.

It's my understanding that congress passed a new law forcing them to restart. Biden will break that law and force a new lawsuit.

Logos Stick said:

---

Maroon Dawn said:

---

Logos Stick said:

---

Maroon Dawn said:

---

Logos Stick said:

---

That's not going to happen. Biden will pause them again.

He'll get sued for breaking the law and it'll take until after the election to be resolved.

---

Not if SCOTUS rules he cant

---

They will rule that, but it has to make its way through the courts. That's the strategy.

---

Aren't they set to rule on this shortly?

---

I think that is the forgiveness crap he did, not the pause. I could be wrong though.

---

My understanding is the debt deal includes a clause that they can't be paused again and SCOTUS is going to rule that Biden can't use the "emergency" clause to simply pause when there is no emergency

I don't see how he could

Nor would he

They WANT this ruling so he can say "Sorry folks I tried! Vote Democrat so we can try again!"

Logos Stick said:

---

Maroon Dawn said:

---

Logos Stick said:

---

That's not going to happen. Biden will pause them again.

He'll get sued for breaking the law and it'll take until after the election to be resolved.

---

Not if SCOTUS rules he cant

---

They will rule that, but it has to make its way through the courts. That's the strategy.

---

I haven't spent time investigating this-

but pretty sure that the DEBT DEAL just signed by Biden with the Republican House will force him to not defer the loan repayments any longer.

LMCane said:

---

Logos Stick said:

---

Maroon Dawn said:

---

Logos Stick said:

---

That's not going to happen. Biden will pause them again.

He'll get sued for breaking the law and it'll take until after the election to be resolved.

---

Not if SCOTUS rules he cant

---

They will rule that, but it has to make its way through the courts. That's the strategy.

---

I haven't spent time investigating this-

but pretty sure that the DEBT DEAL just signed by Biden with the Republican House will force him to not defer the loan repayments any longer.

---

I know what happened. He'll break that law and force a lawsuit.

Once the court rules, if they don't break the rules in a different way that invites a court case on a different legal rationale, the administration is in contempt of court, and I think that can have more direct legal repercussions on the leadership.

Anyone who hasn't been paying on their loans just because they didn't have to is a moron. I look forward to their tantrums.

If the money is coming out of those borrowers pockets….whose pocket is it going into?

The other side of this transaction is there is someone that hasn't been paid what they are owed for three years.

MouthBQ98 said:

---

Once the court rules, if they don't break the rules in a different way that invites a court case on a different legal rationale, the administration is in contempt of court, and I think that can have more direct legal repercussions on the leadership.

---

I just don't see how you can force the executive branch to collect without major intervention, like arresting folks in the department that does the collection. Garland and Wray are not going to do that.

chris1515 said:

---

If the money is coming out of those borrowers pockets….whose pocket is it going into?

The other side of this transaction is there is someone that hasn't been paid what they are owed for three years.

---

The interest has been coming from you, the taxpayer.

Logos Stick said:

---

MouthBQ98 said:

---

Once the court rules, if they don't break the rules in a different way that invites a court case on a different legal rationale, the administration is in contempt of court, and I think that can have more direct legal repercussions on the leadership.

---

I just don't see how you can force the executive branch to collect without major intervention, like arresting folks in the department that does the collection. Garland and Wray are not going to do that.

---

You're not looking at the big picture here

Dems WANT this to happen so they can blame Republicans and run on "we are still working to cancel your loans but you have to vote Dem again!"

Contempt of ScOTuS would be an impeachable offense though you'd not get a senate conviction.

Maroon Dawn said:

---

Logos Stick said:

---

MouthBQ98 said:

---

Once the court rules, if they don't break the rules in a different way that invites a court case on a different legal rationale, the administration is in contempt of court, and I think that can have more direct legal repercussions on the leadership.

---

I just don't see how you can force the executive branch to collect without major intervention, like arresting folks in the department that does the collection. Garland and Wray are not going to do that.

---

You're not looking at the big picture here

Dems WANT this to happen so they can blame Republicans and run on "we are still working to cancel your loans but you have to vote Dem again!"

---

You could be right. We shall see.

MouthBQ98 said:

---

Contempt of ScOTuS would be an impeachable offense though you'd not get a senate conviction.

---

They may try to get creative with it, something like putting in a plan to work with those who can't pay which will be a perpetual delay which is defacto forgiveness. Or a significant reduction in the amount.

I'm sure many will default on the loans and Joe will simply not do anything to collect, and just write it off to the taxpayer.

Those people will vote Dem anyway.

Ag_of_08 said:

---

Ezra Brooks said:

---

My car note represents about the same headwind on my budget - but I don't see anyone wanting to forgive me on that payment.

---

And when you can't pay it, it can be discharged in a bankruptcy as well. Make student loans the same as every other investment related loan, and the comparison is valid.

---

Is the ability to qualify for a student loan the same as a car loan? That is why school loans should not be discharged in bankruptcy court. You must have attended the barney frank-christopher dodd school of economics.

Thanks to dimtards their student loans have been given a severe inflationary haircut so the cry babies should be smiling.

Ag_of_08 said:

---

Ezra Brooks said:

---

My car note represents about the same headwind on my budget - but I don't see anyone wanting to forgive me on that payment.

---

And when you can't pay it, it can be discharged in a bankruptcy as well. Make student loans the same as every other investment related loan, and the comparison is valid.

---

You know as well as I do that that won't work. The loans are backed by the taxpayers, not the banks.

I took out thousands in loans for an online graduate program years ago before I went to WOCS. I would immediately drop all of my classes both semesters after enrollment day. I had $40k in student loan repayment in my then enlistment contract but no loans. So I used them to buy a truck in cash, then used the army student loan repayment to pay them off since they weren't tied to academic progress.

And as soon as they are dischargeable, the market will IMMEDIATELY correct itself, because no services will touch them. The SL industry collapsing will force university reform, and the market will correct.

To the poster that said it: it doesn't have the same requirements, but it should as a business or investment loan. Make them dischargeable and the will in short order...

Maroon Dawn said:

---

Logos Stick said:

---

That's not going to happen. Biden will pause them again.

He'll get sued for breaking the law and it'll take until after the election to be resolved.

---

Not if SCOTUS rules he cant

---

Won't stop the commander in crapper..

Ag_of_08 said:

---

Ezra Brooks said:

---

My car note represents about the same headwind on my budget - but I don't see anyone wanting to forgive me on that payment.

---

And when you can't pay it, it can be discharged in a bankruptcy as well. Make student loans the same as every other investment related loan, and the comparison is valid.

---

No issues here. Undergrad loans. Med school loans. $750k. Graduation is on Saturday. Set appointment with my lawyer to file bankruptcy on Monday. Do my 4 years of residency and after a year of practice making $300k salary's and I'm set. Bankruptcy will be off my record by the time I'm ready to buy my house.

Teslag said:

---

I took out thousands in loans for an online graduate program years ago before I went to WOCS. I would immediately drop all of my classes both semesters after enrollment day. I had $40k in student loan repayment in my then enlistment contract but no loans. So I used them to buy a truck in cash, then used the army student loan repayment to pay them off since they weren't tied to academic progress.

---

This is sad to read. Thoughts and prayers for any children you rear since integrity is certainly not part of how you make decisions.

You essentially defrauded the government into buying a truck for you.

Ag_of_08 said:

---

Ezra Brooks said:

---

My car note represents about the same headwind on my budget - but I don't see anyone wanting to forgive me on that payment.

---

And when you can't pay it, it can be discharged in a bankruptcy as well. Make student loans the same as every other investment related loan, and the comparison is valid.

---

We've gone over this before. Student loans do not have collateral. They can't take your diploma from you if you default on the payments. Your house, car, construction, etc loans have collateral and that is what reduces risk for the lender. Student loans represent one of the cheapest ways to get uncollateralized loans, even if they were at 8%. Credit cards are at 25%.

Compound that with the fact that banks are not allowed to loan money only to degree plans and candidates with a high likelihood of repayment, we have the current system were in.

AggieEP said:

---

Teslag said:

---

I took out thousands in loans for an online graduate program years ago before I went to WOCS. I would immediately drop all of my classes both semesters after enrollment day. I had $40k in student loan repayment in my then enlistment contract but no loans. So I used them to buy a truck in cash, then used the army student loan repayment to pay them off since they weren't tied to academic progress.

---

This is sad to read. Thoughts and prayers for any children you rear since integrity is certainly not part of how you make decisions.

You essentially defrauded the government into buying a truck for you.

---

Fraud is a legal construct. I did not violate any law and acted complete within the contract I entered into.

Ezra Brooks said:

---

My car note represents about the same headwind on my budget - but I don't see anyone wanting to forgive me on that payment.

---

Furthermore, you can repossess a car. You can't repossess an education.

Teslag said:

---

AggieEP said:

---

Teslag said:

---

I took out thousands in loans for an online graduate program years ago before I went to WOCS. I would immediately drop all of my classes both semesters after enrollment day. I had $40k in student loan repayment in my then enlistment contract but no loans. So I used them to buy a truck in cash, then used the army student loan repayment to pay them off since they weren't tied to academic progress.

---

This is sad to read. Thoughts and prayers for any children you rear since integrity is certainly not part of how you make decisions.

You essentially defrauded the government into buying a truck for you.

---

Fraud is a legal construct. I did not violate any law and acted complete within the contract I entered into.

---

I am 100% positive that if you inform the Army that you took out student loans with zero intent of making academic progress, but rather to buy a truck with those funds, the Army would have an issue with it.

As a tax payer you should have an issue with people abusing loopholes to enrich themselves with government money meant for specific purposes.