Bills from Uncle Sam

In October the US federal government resumed sending bills for student loan repayments. With about USD 1.6 trillion in outstanding student loans, some commentators forecast that borrowers who have to restart their payments would decrease their spending considerably. Certain retailers, too, have called out student loan repayments as negatively impacting their sales results. Although data is limited, one can observe that at Big Box retailers such as Walmart and Target student loan borrowers decreased their spending slightly more than non-borrowers. However, the differences are not significant and the bigger picture is that overall consumer spending at Big Box retailers is decreasing anyway. At the same time, ecommerce share of total retail spending is increasing again after a pause when brick-and-mortar stores reopened. Perhaps this is having a bigger impact on Big Box retailers than student loan repayments.

Source: Earnest Analytics, Orion transaction date, October 2023.