Student loan relief is gone for millions of Americans — here’s what it means for retailers

By striking down student debt forgiveness Friday, the U.S. Supreme Court not only added a hefty expense back into millions of Americans’ budgets. It also created the latest challenge for retailers already struggling to predict how consumers may spend in the coming months.

The court’s decision squashed President Joe Biden’s plan to forgive up to $20,000 per borrower in federal student loan debt. Student loans will already take a bigger bite out of budgets this fall as payments and interest accruals resume after a more than three-year pandemic-related pause. Biden announced steps Friday to make the transition to resuming payments easier and create a path to forgiveness of some loans.

The opinion means outstanding loan balances will be higher as those payments resume than they would have been if the court had ruled in favor of Biden. The plan would have wiped out all debt for nearly 45% of borrowers, or about 20 million people, according to the White House.

The return of payments adds another disruption for the approximately 40 million Americans who have student loans at a time when consumers are showing more caution. Nearly all Americans said they are pulling back on spending in some way, according to a recent CNBC and Morning Consult survey. Retailers, including Walmart, Target, Home Depot, Kroger and Foot Locker, said customers are buying fewer big-ticket items and switching to lower-priced private-label brands.

The timing of the change could amplify its impact on retailers. Student debt repayment is poised to resume just before the all-important back-to-school and holiday seasons.

The loan changes won’t “make or break if we go into a recession or not,” said Brad Thomas, a retail analyst at KeyBanc Capital Markets. Yet he said it may have a psychological effect on debt-saddled Americans who are on the hook for hundreds of dollars in monthly…