018: College Debt Forgiveness 06-30-23

Get ready to step into the world of finance and economics with our distinguished guest, Megan Horneman, the Chief Investment Officer for Verdence Capital Advisors. She's here to unravel the economic repercussions of the recent Supreme Court decision overturning Biden's Student Loan Forgiveness Program. Given that around 40 million Americans are shouldering almost $2 trillion in student loans, the verdict marks a significant shift, hinting at potential financial burden on the horizon as the loan payment suspension is predicted to lift by late summer.

This episode is peppered with insights on how this pivotal legislative decision can possibly chip away half to 1% off the GDP. With the equity market in a strong rally, we discuss the noticeable downward trend in sectors like apparel and luxury goods, indicating a potential fall in discretionary spending due to the financial strain. We delve into the recent softening in personal spending and the potential challenges it can pose to the economic growth. Tune in for this engaging conversation that intertwines law, finance, and economics, and don't hesitate to share your thoughts, queries, or comments at podcast at verdence dot com

Hello, this is Megan Horneman, the Chief Investment Officer for Verdence Capital Advisors, and we're coming to you today with Markets With Megan, we're going to talk a little bit about a Supreme Court decision that actually will impact economic growth for the rest of this year. Today, the Supreme Court overturned Biden's Student Loan Forgiveness Program. This is affecting about 40 million Americans that have student loans and the amount of student loans out there is almost $2 trillion, so this is not an insignificant amount of money. To put this in perspective on how much this has been saving and how much it's going to cost these student loan bars it's about. The average payment for student loans is about $500 a month. That's a big number, so they haven't had to pay this for quite some time. It's going to go into effect, most likely late this summer, so these young Americans and anybody with a student loan is going to have to start repaying this back $500 a month. That can equate to, by our math, shaving about half to 1% off of GDP. So this is a big deal, we think, from a consumer standpoint.

We're seeing today in the stock market, while the equity market is rallying strongly, there's areas like apparel, luxury goods. These are all down on the anticipation that there's going to be less discretionary spending because of this action. The other thing we got today was that we saw some more softening in personal spending as well. There was a big surge beginning this year and now we're seeing personal spending already softening and this is before we've gotten this student loan information. So again, this isn't great for growth. We think it'll weigh on the consumer for the rest of this year and we'll weigh on GDP as well. We'll keep watching the developments and we'll be back with any more information that we find, but if you have any questions, feedback or comment, please feel free to reach out to us podcast at verdence dot com Thank you.