Student loan repayments to start up in October – Will it spark a recession?

For more than three years, repayments of federal student loans have been paused. With the Supreme Court ruling against President Biden’s student loan forgiveness, loan payments will restart in October, with interest beginning to accrue again in September.
That raises the question of how much consumer spending will fall as borrowers redirect what were discretionary dollars back to student loan payments. After an initial economic slump when COVID-19 it, the U.S. economy has been surprisingly resilient. How well can it weather withdrawal of a big pandemic-era fiscal support program?
In June, UBS said it expects the resumption of the payments to disproportionately reduce spending on apparel and pointed to a number of retailers likely to be affected. KeyBanc Capital Markets downgraded Target (TGT) on a similar thesis.
Student debt stood at ~$1.57T at the end of Q2, according to the Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit. The U.S. Department of Education put the amount at $1.77T at the end of Q1. Both numbers are higher than the amount of credit card debt that U.S. consumers hold, which rose to $1.03T at June 30, 2023.