Banks will quickly realize that they can borrow funds in the federal funds market at 4 percent and deposit those funds at the Fed and earn the interest on reserve  Section 19(b)(2) of the Federal Reserve Act requires each depository institution to maintain reserves against certain liabilities of the bank.
Student loan balances keep rising, and delinquency rates on those loans are near historical highs. These strains within the household sector leave such borrowers vulnerable to adverse shocks and probably weigh on their spending.