Outstanding consumer credit rose in October for the third straight month by $14.2 billion. Much of the increase is related to loans for students who, facing a less-than-ideal job market, have chosen to stay in school, Pragmatic Capitalism reports.
Student loans sponsored by the federal government comprise nearly 20 percent of American consumer credit, excluding mortgage debt. If student loan debt continues to increase at the rate it has over the past 12 months, government-owned student loan debt will reach $1.7 trillion in 10 years, reaching approximately 39 percent of total consumer debt, assuming that other consumer debt grows at the current rate.
Lending by the federal government, primarily for education loans, increased $6.9 billion in October before seasonal adjustment. President Obama signed a bill in July that would prevent student loan rates from doubling, according to Telegram.com.
The Fed’s figures fall short of numbers from the Consumer Financial Protection Bureau, which found earlier in the year that Americans carry more than $1 trillion in outstanding student loan debt. The Fed said that $23 billion of student loan debt is derived from newly originated student loans, The Hill reports.