SCOTUS student loan ruling could be a ‘modest headwind’ against economic recovery: Economists – By Laura Gersony (ABC News) / June 30, 2023
While unlikely to cause a recession it could cool consumer spending.
The Supreme Court’s decision striking down President Joe Biden’s program to forgive student loan debt for about 43 million people could hurt not just individual borrowers, but also the U.S. economy, as billions of dollars of consumers’ disposable income are taken out of circulation.
The ruling could spark a “modest headwind” against economic growth, Bernard Yaros, an economist at Moody’s, a financial risk assessment firm, told ABC News.
“None of this is enough to tip the economy into a recession,” Yaros said. “But this is no doubt a hit.”
The total funds diverted to the resumption of student loan payments will come to an annualized $73 billion, or 0.27% of the United States’ GDP, Moody’s estimates. Biden’s student loan forgiveness plan, struck down by the Supreme Court on Friday morning, would have halved that figure, according to that analysis.
