Exactly how big the drag will be is a matter of debate. In 2017 the Federal Reserve calculated that the average monthly payment on student debt was $393; other estimates put it closer to $250. Cash has already started flooding into the Treasury as some rush to pay off their debts . Multiplied by all borrowers, the higher average would add up to a total monthly repayment of $17bn, or about 1% of household consumption.
Moreover, the Biden administration has introduced a new repayment plan that expands a previously existing programme for reducing the debt burden on poor Americans. Borrowers making $32,800 a year or less will be exempted from payments. Totted up, analysts at Capital Economics, a consultancy, reckon that the bill to households will work out at $6bn or so a month—closer to shaving off about 0.3 percentage points from America’s growth.