Millions of Americans with federal student loans have been making payments again. Given the huge scale of student loan debt in the US — more than 40 million people collectively owe more than $1.6 trillion — there are concerns that discretionary consumer spending will take a hit. The issue is sure to play a role in the 2024 political campaign season, as many young voters fault Republicans and a conservative-majority Supreme Court for stymieing attempts by President Joe Biden, a Democrat, to ease the debt burden. Biden, for his part, has used existing federal payment programs to forgive some loans despite the Supreme Court ruling. The rising cost of college and graduate school, too, means that student debt is a problem that’s not going away.
Payments were halted by President Donald Trump in March 2020 as Covid lockdowns began in the US. The freeze also temporarily gave borrowers a 0% interest rate on their loans. The moratorium was extended multiple times. But then last year, Biden and then-House Speaker Kevin McCarthy, a Republican, agreed to a plan to raise the nation’s debt limit and avoid a government shutdown. That deal included a provision that prohibited the Education Department from authorizing another extension after the latest one expired. Interest accruals resumed on Sept. 1, and bills began coming due in October.
