Student Loans Top Consumer Debt

Consumers may be using fewer credit cards to finance their lives, but student loan debt continues to rise, according to a new report from The Federal Reserve. Fed data shows that while credit-card lending fell for a 26th consecutive month, non-revolving debt like car loans and student loans rose by more than $9 billion.

Much of the increase was led by student loans which are now primarily issued by the government. A greater number of Americans are returning to college to earn a higher degree in a competitive job market and more individuals are borrowing money in the down economy to attend college. In fact the jump in non-revolving loans boosted overall consumer credit jumped by $3.4 billion, the biggest rise in two years, beating expectations.

It’s an interesting development that further points to the growing student loan crisis in this country. We already know that student loan debt has eclipsed credit card debt. We also know that a rising number of student loan borrowers are defaulting. The overall student loan default rate is 7 percent, according to the government, though many industry experts believe the figure to be much, much higher. And with the grace period ending soon for recent college grads, it’s likely that many more will fall behind – particularly those with private student loans, which have far fewer repayment options than federal loans.

by http://www.credit.com