The Biden Administration on Friday announced that it would forgive $39 billion in student loan debt for 804,000 borrowers as part of a plan to help reinvent repayment plans for undergraduate loans.
“President Joe Biden and I are committed to delivering relief to student loan debt borrowers to help them move forward with their lives — whether they want to start a family, buy a home or become an entrepreneur,” said vice president Kamala Harris in a statement. “Addressing these harmful practices and reducing student loan debt has been a priority throughout my career.”
The news comes shortly after the Supreme Court struck down President Biden’s broader student loan forgiveness plan that sought to help 37 million people achieve loan forgiveness. At the time, some retail experts bemoaned the immediate harsh effects that the ruling could have on the footwear and retail industries, as loaners would have to readjust budgets to make arrangements to pay back their loans.
In a note to clients at the time, GlobalData managing director Neil Saunders said the Supreme Court’s decision was “bad news” for retail, citing mostly younger and lower-income households that would “need to pull back more heavily on spending once repayments resume.”
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Spurwink River advisor and senior advisor at BCE Consulting Matt Powell also noted the negative impact that resuming student loan payments could have on consumer spending.
“There’s no path to say that this is a good thing for us,” Powell said. “So, I think it just adds to all the other negativity that’s out there. And I think it’s going to hurt sales.”
While not as far-reaching as President Biden’s initial proposal, the new relief plan eases debt for more than 800,000 borrowers at a time where budgets are already tighter than usual due to inflation. Consumer prices rose 3 percent in June compared to last year, according to the latest Consumer Price Index released on Wednesday by the U.S. Bureau of Labor Statistics. This marked the smallest 12-month increase since the period ending March 2021 and a slowdown from May’s 4 percent growth.
Retail footwear prices dropped in June, down 0.9 percent compared to the prior year, marking the first time prices dropped in 26 months.
