Bloomberg News released a special podcast over the weekend to discuss the effects the recent U.S. Supreme Court decision on student loan repayments.
The episode began with a borrower named Megan, who Bloomberg described as being in “shock” that she would have to repay all of the tens of thousands of dollars she owes for her education. She was lamenting that her lifestyle will have to change.
For Megan, the impact for her will mean cutting back on locally sourced food from upscale retailers and travel.
Bloomberg News also spoke with a middle school history teacher in Philadelphia named Marcus, who has $50,000 in student debt. He said he is “anxious, stung and hurt” that he won’t be receiving this type of assistance anymore. As a result, he is preparing for the repayments to restart by cutting out his daily coffee and limiting how many times he goes out socially.
While neither of these former students has any plans to default on their debt, they were counting on having most of their student loans forgiven and planned their spending around that faulty assumption rather than set aside money to handle the debt.
Mark Zandi, Chief Economist at Moody’s Analytics, commented that it will be tough for many borrowers after three years of having the payments paused.
Zandi and Thomas Simons, U.S. economist at Jeffries, also warned of the negative impact on the economy with loan payments resuming i.e. spending that was going elsewhere in the last three years. Simons called the resumption of loan repayments as a tax increase for the borrowers.
Zandi and Simons are probably correct about the negative impact on the economy, but on the other hand, the economy has been given a false boost by any spending by student loan borrowers. These borrowers incorrectly believed that Biden’s scheme was actually legal and they would be let off the hook for most or all of their legally obligated debt.
For Bloomberg News and the Biden administration, they continue to ignore those that have worked diligently to repay their student loans while watching others get a taxpayer-assisted lift, without having earned it all in the name of vote-buying politics.