See the 12 major retailers most likely to take a hit when people start repaying their student loans

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  • The student-loan repayment pause could finally end this fall. 
  • That means consumers will have to direct more money away from retailers and toward repaying their loans.
  • Jefferies analysts said that this could be a headwind for companies like Amazon, Walmart, and Target.

Student loan repayments could be resuming as soon as this fall, and that means consumers will have less money for discretionary spending, whether that’s eating out, taking in entertainment – or shopping.

Amazon, Walmart, and Target stand to lose the most as consumers with student-loan debt cut back on spending, according to a new research note from analysts at Jefferies. The investment banking firm found that more than a third of student debt holders’ discretionary dollars go to the three retail giants.

“The impending resumption of student loan payments could be a headwind to consumer spending ahead,” the note said. 

Consumers with student debt spend around 18.58% of their discretionary spending at Amazon alone, according to consumer data company Numerator.

The restart of student loan repayments could increase delinquencies and hit consumers’ wallets just as the holiday shopping season begins this year, according to Retail Dive.

Here are the 12 retailers that Jefferies says have the most exposure to consumers with looming student debt repayments, and what percentage of shoppers’ discretionary spending goes to each company:

  • Amazon — 18.58% 
  • Walmart — 11.76% 
  • Target — 5.96% 
  • Costco — 4.24% 
  • TJX Companies — 2.23% 
  • Sam’s Club — 1.16% 
  • Dollar Tree — 0.82% 
  • Dollar General — 0.50% 
  • BJ’s — 0.13% 
  • Five Below — 0.12% 
  • Ross — 0.09% 
  • Ollie’s — 0.02%  

In a separate report this month, UBS analysts said apparel sales, in particular, could take a big hit as borrowers pull back.

Interest on student loan debt will start to accrue again in September, after a long pause that started at early in the pandemic. Payments would then resume the following month. Meanwhile, the US Supreme Court is expected to rule this week on President Joe Biden’s plan to cancel up to $20,000 in student debt. 

Borrowers can prepare for the monthly repayments by looking into different payment options or adjusting their budgets.

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