Close family friends of ours have been counting on the gubmint eliminating some of their college debt. Whenever the topic is brought up I tend to pour cold water on their dreams. The oddsmakers have been betting that this is unconstitutional. The Supreme Court will rule on it, but they seemed pre-disposed to trashing it during the oral argument phase. Now the debt ceiling deal seems to have ended the program.
Logically if free spenders have to start to repay loans, and if those loans have accrued even more interest, then these loan payments will cut into spendable money. Spendable money will be reduced and the economy will take a down turn. It just makes sense.
www.zerohedge.com
FULL STORY AT THE LINK ABOVE from ZeroHedge
Logically if free spenders have to start to repay loans, and if those loans have accrued even more interest, then these loan payments will cut into spendable money. Spendable money will be reduced and the economy will take a down turn. It just makes sense.
ZeroHedge
ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero
www.zerohedge.com
FULL STORY AT THE LINK ABOVE from ZeroHedge
The Great Student Loan Nonpayment Boondoggle Is Over And Household Spending Is About To Collapse
In the small print detailing the end of the debt ceiling melodrama which, as we explained, is a farce as it boosts inflation-adjusted spending contrary to Republican promises, there was some actual news: the great student loan boondoggle is about to come to a screeching halt, after a three year "emergency pause" which redirected tens of billions in dollars away from mandatory student loan repayment to other forms of discretionary spending.
According to Goldman, the agreement announced on Saturday between uniparty leaders Joe Biden and Kevin McCarthy titled hilariously the “Fiscal Responsibility Act”, prohibits the Biden Administration from extending the pause on student loan repayments in place since March 2020, even if it does not block the Administration's student loan forgiveness plan, which would wipe out up to $20,000 in federal loans per borrower and is currently being weighed by the Supreme Court (the plan was announced last year but has not yet implemented).
Here are the details: late last year, Biden extended the repayment pause, which postpones roughly $5bn per month in student loan repayments, until 60 days after the Supreme Court ruled on the separate $400bn loan forgiveness plan the - the Supreme Court is likely to rule on loan forgiveness in June, so this likely would mean a restart of payments after August 2023.
And now, the debt limit agreement prohibits further extension of the payment pause, but remains silent on the student loan forgiveness plan which however will be nixed by SCOTUS much to the chagrin of screaming libs and lifelong members of the "free $hit" army. Prior to the announced debt limit deal Goldman had already assumed the repayment pause would end on schedule, though there was clearly a chance the White House might have extended it once again. The debt limit agreement eliminates that possibility (“except as expressly authorized by an act of Congress") and should result in a restart of student loan payments in September 2023.
What happens then?
Well, according to Jefferies, the return of monthly loan payments presents risks similar to the effects of the 2013 fiscal cliff, when tax increases led to reduced consumer spending. And in a note released Monday (available to pro subscribers), JPMorgan’s chief US economist Michael Feroli said that the end of the payment moratorium will reduce annual disposable personal income by $38 billion, which will reduce consumer spending. . .
