When federal student loan payments resume this fall, they are expected to pull as much as $71 billion in otherwise disposable income out of the economy every year, $5.3 billion of which will come from Arizona.
“It’s a drag, but it’s a very modest one at that and it’s really not enough to derail the economy,” Yaros said, noting that the payments are projected to reduce personal consumption expenditures by 0.2% next year. Biden, who campaigned on a promise of broad debt relief for student borrowers, has since responded with alternative plans that his administration hopes will stand up to congressional and Supreme Court demands.
He estimated the average individual monthly student loan payment in Arizona will be around $500, or about $6,000 per year. With a median Arizona family income of $75,000, that means borrowers will put roughly 8% toward repayments. By comparison, the Phoenix-Mesa-Scottsdale area was highest in Arizona, at $3,749 student debt per capita, followed by Flagstaff, at $3,274. Yuma had the lowest debt per capita in Arizona, at $1,675.
“Younger people are trying to save up for large purchases, so it could have effects on the housing market where people who previously were trying to save up money for a down payment are instead going to have to pay back their debt obligations,” Heimer said.
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