The pandemic-era pause on federal student loan payments ends Sunday, leaving as many as 40 million Americans on the hook for a new monthly bill they havent needed to make in more than three years.

Economists caution that the impact on households and the economy remains largely uncertain, as there is little precedent for borrowers getting such a long break from their loan bills, according to CNBC news network.

American households will get their first bills during an especially volatile period, with the highest interest rates in decades, workers on strike across the country and a looming government shutdown, CNBC added.

“The economy will struggle in the fourth quarter, in meaningful part due to the end of the student loan payment moratorium,” said Mark Zandi, chief economist at Moodys Analytics Financial services firm Jefferies is warning that “there could be a significant risk to consumer spending ahead,” because of the resumption of student loan payments. It recently surveyed about 600 consumers with s
tudent debt, finding that half of borrowers are “very concerned” about meeting all of their expenses.

Around 70% of borrowers plan to postpone big-ticket purchases come October, its poll found. Meanwhile, many people with student debt plan to cut back their spending on clothing, travel and food, according to the network.

“As we go into the holiday season, this will be an extra drag on retail spending,” CNBC quoted Brett House, a professor at Columbia Business School, as saying.

President Joe Biden’s administration had hoped to ease the transition back to loan payments by forgiving up to $20,000 in student debt for many borrowers, but the Supreme Court blocked that policy in June. (MORE)

Source: Qatar News Agency