One part of any “good” macro bear narrative for the back half of this year entails suggesting the resumption of student loan payments in the US will serve as a drag on a spending impulse that was already set to wane as pandemic buffers dwindle.

While entirely plausible, it’d be foolish to overweight that consideration when assessing the prospects for a downturn in consumption, let alone economy-wide retrenchment.

First, some people simply aren’t going to make those payments. You can take that absolutely literally. The bills are going to show up, and a non-negligible percentage of borrowers are going to throw them in the trash.

As a quick aside, I’ll confess it gives me some satisfaction to state that so bluntly. That so many ostensible adults wasted what, in aggregate, probably summed to decades, complaining online about student loan forgiveness over the past two years was a sad testament to Americans’ penchant for pettiness and petulant spite.

That anyone would take time away from their own lives (tantamount to robbing their own children and pets of invaluable attention) to commiserate in the digital void with total strangers about the alleged injustice of other total strangers getting $20,000 in debt relief tied to a fine arts degree was (and still is) unfathomable to me. It’s crazy. In a clinical sense. Don’t be that person. Life’s far, far too short for that.

Besides the people who simply won’t pay these bills, there’s a large contingent who’ll qualify for modified repayment plans. I don’t know the exact details because — well, see the preceding paragraph — but it’s clear that the Biden administration, irritated to no end by the Supreme Court’s decision to strike down the debt forgiveness plan, intends to implement it anyway using a patchwork of policies, including plans designed to minimize many borrowers’ payment obligations.

And then there’s the in-between cases. Some borrowers will make some payments, then skip some payments. This isn’t a car loan, or rent or a mortgage. If it gets dicey during a given month, this is going to be the very last thing a cash-strapped American pays. Plus, a lot of borrowers probably still have leftover forbearance allocations. And on and on.

Bottom line: I continue to encourage those of you interested in reality (as opposed to the fantasy world where your principles always prevail) to understand that this debt burden isn’t going to be paid back. Ever. There’s too much of it and all of the borrowers are voters. It’s one thing to proclaim that principles should prevail. It’s another thing to insist on it in a world where no one has any — principles, I mean.

All of that said, it’s interesting to note there’s been a dramatic spike in payments since the SCOTUS decision despite payments not yet being due. Indeed, as the figure below from Goldman shows, remittances to the Department of Education are higher than they were before the moratorium.

Spoiler alert: That’s people with money who had no incentive to make payments over the last three years paying off principal ahead of interest accrual. Goldman offered a trio of explanations, including that one, but the other two are implausible or anyway unlikely to have resulted in that large of a spike.

“Borrowers might have voluntarily restarted monthly payments earlier than required,” the bank’s Alec Phillips innocently ventured. That ain’t it. Phillips also suggested automatic payments could be a factor — so, some borrowers whose payments were on auto-draft might’ve already “started” paying, where that just means they noticed a charge on their debit cards that hasn’t shown up since February of 2020.

The more likely explanation, though, is that, as Phillips went on to say, “a subset of higher-income borrowers might have made large one-time payments toward loan principal before payments restart.” “There was little reason to pay down principal during the pause but some borrowers might be making large one-time payments before interest begins accruing,” he added.

Looking ahead, Goldman expects the Biden administration’s income-based repayment option to reduce annual student loan payments by $14 billion per year assuming everyone who’s eligible takes advantage.

Note from the chart that Goldman includes two scenarios where only seven out of 10 borrowers restart payments. The implication (I think) is that the “all borrowers” scenario shouldn’t be anyone’s base case. Seven out of 10 might be optimistic, but it’s probably a reasonable starting point.

Coming full circle, this isn’t likely to be the deciding factor for whether the US economy succumbs to a recession, or at least not in isolation. If everybody starts making payments again, the hit to PCE growth in Goldman’s analysis is 0.8pp in Q4. The bank expects US growth to decelerate next quarter to 1.3%, but rebound to 1.9% next year.

Plainly, these payments could amplify the effect from job losses, tighter credit conditions and any other adverse developments that come along. But we’re not going to look up 10 years from now and find ourselves lamenting the Great Student Loan Repayment Recession.