The stunning strength of the US consumer is at risk as 43 million borrowers are set to resume student loan payments
and while that was below economist estimates, it spoke to the fact that consumers are still spending their money as they hold onto their jobs. student loan payments are restarted,More than 43 million Americans owe $1.6 trillion in student loans, which implies about 17% of the US adult population has an outstanding loan.
"We view the resumption of student loan debt payments as an incremental headwind for borrowers and consumer finance companies. The resumption of a monthly obligation that has been suspended for three plus years could pressure consumer finances and weaken credit performance on other loans," BofA said.
"Adding a monthly obligation for ~30 million people has the potential to cause volatility in consumer finances that are already pressured by inflation and could also be facing higher unemployment levels. This will likely pressure spending as borrowers manage their finances and could also lend to an increase in delinquencies," the note continued.
Such a rise in delinquencies would threaten the broader economy and should increase the likelihood of an economic recession. But while consumers, and potentially the overall economy, are the losers as students have to start paying back their loans, investors in companies like
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