Student loan payments jumped ahead of pre-pandemic levels in the weeks ahead of payments becoming due again in October after a pause during COVID, according to Goldman Sachs economists.
Payments rose to about a $150 billion annualized rate, or about twice the pre-pandemic rate, they said, based on weekly payments to the federal Education Department.
How people handle student loans, which total $1.7 trillion spread across more than 40 million Americans, could be a barometer for which way the economy could be headed. Early voluntary payments could be seen as a sign of financially healthy consumers, but looking closer, Goldman Sachs says the situation may not be as rosy as it looks.
“Over the past few weeks, payments were creeping up,” said Goldman Sachs economist Alec Phillips. “People thought maybe it was a more positive sign for borrowers and consumers, maybe it meant some people were paying earlier than necessary, a good thing because that means they’re not having a hard time making payments. But now that (the amount being paid) is double (what it was pre-COVID), it’s hard to see that.”
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Article URL : https://www.usatoday.com/story/money/personalfinance/2023/09/02/student-loans-payments-surge-before-restart/70742748007/