The freeze on federal student loan payments since March 2020 has allowed millions of individuals to allocate their money toward other needs.
But as the October deadline for the resumption of payments looms, borrowers are increasingly concerned about the impact it will have on their financial situations and consumer spending behaviors.
In the July “Consumer Inflation Sentiment Report: Back to School Means Back to Federal Loan Repayments” report, PYMNTS Intelligence drew on insights from a survey of more than 2,200 U.S. consumers to examine and analyze sentiments on federal student loan repayment and inflation, and how borrows’ lives will be impacted.
According to the study, nearly 90% of consumers with student loans expressed concern about payments resuming, with nearly all of those owing more than $100,000 feeling the heat more strongly.
The impact of resuming loan payments extends beyond financial stress, the report showed. Reallocating funds toward loan repayments means that money will no longer be available for other important goals, such as achieving financial stability, padding savings accounts or paying bills.
Forty-six percent of consumers with loans who are concerned about repayments resuming anticipated that saving money will become more challenging. Additionally, 43% expressed worries about their financial stability, while 36% were concerned about paying monthly bills, and 35% were worried about affording everyday expenses.
This not only affects their ability to build a financial safety net but also has implications for the retail industry, as disposable income is expected to decline during the upcoming holiday season.
The resumption of loan payments is also expected to delay borrowers’ dreams and goals, with some consumers saying aspirations such as buying a home, getting married and having a baby will have to be put on hold as a result.