Young people are already struggling financially, and the potential restart of student loan payments could make their road ahead even bumpier.

While American households overall have emerged from the pandemic in strong financial shape, with plenty of savings and little debt, cracks are beginning to show after two years of high inflation. Especially for young people, who tend to have less savings, earn less money, and typically rent rather than own. Already battling an increase in credit card and auto loan debt, many young people now face a new challenge: the expected restart of student loan payments, suspended since the pandemic began.

“If you’re already falling behind on your credit card payments, how likely do you think it is that when your student loan payments resume that you’re gonna be able to keep up with those?” said Bruce McClary, Senior Vice President of Communications at the National Foundation for Credit Counseling.

Logan Cala is one of many young borrowers behind on his credit payments as the potential restart of student loan payments looms.

Cala racked up $70,000 in student debt when he graduated from Allegheny College in 2018. He never stopped budgeting for his student loans, but he said the expected restart would delay many of his plans, like buying a home.

“I’ve been thinking about buying a home, but it’s looking more and more like now is not the time for me to do that,” said Cala, 27, a hardwood flooring manufacturer from Cleveland, Ohio. “I feel I can pay off my debts, but I’ll certainly miss many experiences as I pay off these debts.”

Cala managed his debt during the pandemic by using money from the stimulus payments. But as the country moves away from covid relief policies, which many economists believe have helped fuel inflation, many young borrowers face a murkier road to rising out of debt.

“If it weren’t for the stimulus payments, I would’ve been in a stickier situation,” Cala said.

One of those pandemic relief policies the country appears likely to move past is the suspension of federal student loan payments.

As part of the policy, the U.S. government extended the suspension of student loans eight times, spanning over three years.

Borrowers could continue making payments, but many stopped paying for those loans, instead paying off other debts or accumulating savings.

Then President Joe Biden unveiled a student loan forgiveness initiative last year that could slice student debt amounts by as much as $20,000 in one-time student debt relief for up to 40 million borrowers, which faces legal challenges.

On February 28, The Supreme Court heard oral arguments in two cases challenging President Biden’s program, which remains on hold after being blocked by a lower court last fall.

Several conservative justices seemed to question the administration’s authority to cancel millions of dollars in federally held loans, putting the program in doubt as the court will likely have its decision by late June, according to most predictions.

The issue for young borrowers is that payments could restart when young people are already struggling financially.

According to the Quarterly Report on Household Debt and Credit from the New York Fed’s Center for Microeconomic Data, delinquency rates for credit card borrowers surpassed pre-pandemic levels for borrowers in their 20s and 30s, as a higher percentage of people in the age groups also missed auto loan payments.

Over 3% of borrowers in their 30s transitioned to 90 days or more past due on credit card payments, while those in their 20s trailed just a bit behind. Every age group 50 or over sat below 2%.

With the mounting short-term debt for younger Americans in credit card and auto loans, the restart of student loan payments can create a mountain of debt that’s too tough to climb.

“The suspension of student loans, you have to realize this has been three years now. So a lot of this has been budgeted out of a lot of people’s finances,” said Hamza Tahirovic, a graduate student at Queens College Data Analytics who specializes in youth finance problems. “And typically, young adults are a little less cautious when planning for their finances in the long term. So now when a lot of those repayments come back online, it’s not included in the financial budgeting that they had, that they have kind of planned for in the past three years.”

According to Tahirovic, whose recent research evaluates how young people’s income statements and balance sheets have evolved over the past 15 years, short-term loans like credit cards or auto loan payments affect long-term loans like student loans because people were used to them being intertwined.

After three years of not having to pay federal student loans, this is no longer the case for many borrowers, Tahirovic said.

Tahirovic also warned that the state of the economy is another challenge for young people.

The Federal Reserve has been raising interest rates at the fastest pace since the 1980s, including increasing interest rates in its most recent meeting in March by 0.25 percentage points, bringing rates to 4.75%.

Rising interest rates increase the cost of borrowing, making it costlier to take on and/or fall behind on debt, which the Fed has pursued to slow the economy to tame inflation.

Still, as young borrowers face higher levels of short-term debt that they need to catch up on, student loans may push younger Americans further out of the economy, that’s likely to slow down at some point.

“It is really just like a perfect storm of a real credit crunch that that is really going to make any kind of prospect of even accumulating wealth, buying a home, having a savings account that yields positive returns, all these things are not going to be possible,” said Alí Bustamante, Deputy Director of the Worker Power and Economic Security program.