It’s looking like student-loan repayments won’t be such a big drag on the U.S. economy after all

In fact, there was a big jump in payments when the end of forbearance was announced over the summer. “The flow of payments has cooled somewhat following his initial surge, and we think the figures seen in more recent weeks (reflecting the period in which payments were actually due) are probably indicative of where the new underlying trend may settle in at,” the team wrote.

That’s about a $75 billion annual rate — or about 0.2% to 0.3% of GDP. Payments were running at about $10 billion during the moratorium. If payments were met by a one-for-one pullback in consumer spending, that would hurt real GDP growth by about 1% in that quarter. “However, we don’t expect to see as large of a drag on economic activity,” they said. “As mentioned above, a generally favorable backdrop for household balance sheets could be allowing households (in the aggregate) to make these payments relatively easily. And the early payments coming from many individuals add support to this idea.”

They noted the New York Fed’s monthly survey of consumer expectations asked about student loan repayments. On average, those borrowers with delayed repayments anticipated cutting consumption by about $56 per month. Scaled up to the 28 million borrowers, that would amount to about 0.1% of consumer spending in August, or a 0.3% percentage point drop in annualized GDP. They did admit, however, that the New York Fed sample size was small, with just 151 respondents.

The Atlanta Fed’s nowcast estimate of third-quarter GDP growth stands at 5.4%, and economists polled by the Wall Street Journal forecast 4.5% growth. And that’s a period where the student-loan repayments began pouring in, even though they weren’t yet required.