018 College Debt Forgiveness

Episode 018: Welcome to "Markets with Megan," where Megan Horneman, the Chief Investment Officer at Verdence Capital Advisors, provides insightful economic analysis. In this episode, we dive into a Supreme Court decision that has significant implications for economic growth throughout the year. The Supreme Court recently overturned Biden's student loan forgiveness program, affecting approximately 40 million Americans carrying a staggering $2 trillion in student loans. Join us as we explore the impact of this decision on individuals and the economy as a whole.

With the program no longer in effect, student loan borrowers will have to resume paying an average of $500 per month, a substantial financial commitment. This change is likely to take effect later this summer, causing young Americans and anyone with student loans to adjust their budgets accordingly. In fact, our calculations suggest that this shift in repayment could potentially shave off half to one percent of the GDP.

The consequences extend beyond individual borrowers. From a consumer standpoint, we anticipate a decrease in discretionary spending, leading to implications for various sectors. For instance, we have observed declines in apparel and luxury goods within the stock market, reflecting market expectations of reduced consumer spending.

Moreover, we are already witnessing a softening in personal spending, even prior to the implementation of the student loan repayment. This adds further concerns regarding economic growth for the remainder of the year.

Stay tuned as we closely monitor the developments and provide you with updated information. If you have any questions, feedback, or comments, please don't hesitate to reach out to us at podcast@verdence.com. Thank you for joining us on this episode of "Markets with Megan."