The Impending Student Loan Crisis: A Blow to Consumer Spending

The resumption of student loan repayments next month is expected to drain $5.5 billion to $8.2 billion per month from consumers, leading to a sharp slowdown in consumer spending and a contraction in the first quarter of 2024. Fitch Ratings predicts that student loan delinquency rates will quickly reach pre-pandemic levels or higher. This comes as the Federal Reserve's efforts to stabilize inflation by raising interest rates are starting to impact consumers, and other forms of debt, such as credit card and auto loan balances, are increasing.