As student loan payments resume with the end of the forbearance period on October 1, 2023, 44 million consumers are affected with a potential $9 Billion impact on consumer spending EACH MONTH. It could pull roughly $100 billion away from consumers, with the biggest impact on Gen Z and Millennial age groups1. The average payment across rural, suburban, and urban markets is $277.98 monthly.
How Will Borrowers Adjust Their Spending as Student Loan Payments Resume?
Borrowers surveyed by Prosper Insights & Analytics indicated the biggest spending adjustment will be made for dining out, entertainment, and apparel as they resume student loan payments. In October, borrowers indicated they would cut spending in the following categories:
So what can marketers do to prepare for these spending cutbacks across a variety of categories? Cast a wider net by adding deeper discounts to your marketing mix and consider fine tuning who you target (and what you offer them).
- Retail, restaurant, and grocery marketers could see results with a shift to VALUE-focused messaging. Consumers are increasingly prioritizing value in their spending choices due to inflation, the potential government shutdown, and rising interest rates.
- In response to price increases consumers in both rural and urban markets are comparison shopping and looking for sales and using coupons more often2.
- Remember Boomers? As you might expect, the lowest impact of student loan payment resumption among all age groups is Boomers, with only 3.3% owing a student loan balance.
Mspark can help you adjust your audience targeting to focus on consumer groups with the highest potential and to mitigate impact from shifts in consumer behavior. Learn more about our targeting capabilities here.
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Sources: Alternative Data Expert CloudQuant Peeks Into the Future of Inflation, forbes.com1; Prosper Insights & Analytics2