Student Debt Research Brief
Consumers Tighten Budgets as Student
Loan Payments Resume
Supreme Court blocks Biden-Harris student debt forgiveness plan. Early in the health crisis, the CARES Act froze repayment and interest accumulation on federal student loans. In 2022, the Biden Administration introduced a forgiveness plan for qualifying borrowers, worth between $10,000-$20,000. Borrowers have not had to make monthly payments in over three years, and many may have been anticipating forgiveness and aligning spending habits accordingly. In June 2023, the Supreme Court blocked the forgiveness aspect of the plan, and federal student loans will begin accruing interest this September, with payments to resume in October. Given that over 43 million people hold some federal student loan debt, amounting to more than $1.6 trillion, this could negatively affect consumer activity.