Student loan payments are set to resume on October 1^st, and people are not ready, especially borrowers. More than 40 million Americans hold student loans, and the majority are in forbearance. These borrowers are not prepared to repay financially, and it’s difficult to blame them when the administration has said countless times that they would solve the student debt problem.

This problem is growing. According to LendingTree TREE , among the class of 2021, 54% of bachelor's degree recipients graduated with an average debt of $29,100. This financial strain can have long-lasting effects, making it challenging for borrowers to save or make major life decisions such as buying a home or starting a family. The bottom line is that consumption will drop as payments restart.

It is difficult to see a world where immediately adding a payment to tens of millions of working-age Americans doesn’t impact economic growth and reduce energy prices. According to a variety of sources, the average student loan payment is between $200 and $400. The College Investor places it near the lower end of the range at $222 per month. The Federal Reserve Bank of New York places payments at the higher end at $393 per month. Anything in that range would immediately eclipse the amount the average American spends on vacation, 40% of which goes to transportation. It could impact household expenses in other ways, but leisure activities are typically where you see the largest hit as these expenses are in the borrower’s control vs. other major costs such as housing, utilities, and food.

Repayments are coming at a terrible time for the average family, regardless of what people think the stock market might be saying about economic health. The Balance said that half of Americans have less than $250 left each month based on their most recent financial survey, and this was during a year when student loan payments were paused. It is important to be clear that for most Americans, the excess money in their pockets each month amounts to less than the payments that are restarting for tens of millions. Individuals that are unable to save are already using credit to plug the gap, and the remaining, who are already barely getting by, might have that number eclipsed by student loan payments.

Interestingly, the administration hasn’t been that vocal about the restart of payments, which seems surprising due to the impending and predictable economic and popularity hit. Perhaps the reduction in consumption is viewed favorably during a time when fighting inflation appears to be how the public is marking governments. It is certainly surprising to borrowers, though, as they still wait for the promised long-term student debt solution. Confusion around student loans is upsetting for families, and further uncertainties and a restart of payments will certainly have people spending less. We should not be surprised to see this show up in the economic data in the fall, and it could even show up earlier as people prepare. If repayments do restart you hope that the Fed takes into account this additional source of tighter policy. It has not been mentioned much to date though which creates concern that all impacts, rate increases with a lag and student loan payments, show up in the economy at once.