Thursday, September 8, 2011

Students Heart Debt... Everyone Else Deleveraging

Bloomberg details:

Consumer borrowing in the U.S. rose by the most in more than three years in July, led by a gain in non-revolving credit that includes student loans.
Credit increased $12 billion after a revised $11.3 billion rise in June, the Federal Reserve said today in Washington. Economists projected a $6 billion gain, according to the median forecast in a Bloomberg News survey. The rise in non-revolving loans was the most since November 2001.
Revolving credit showed the biggest decrease in six months, indicating Americans may be cutting back on non-essential items as limited job and wage growth depresses consumer confidence. Employment and income gains may be required to help spark the household spending and the recovery.

Note that the chart above assumes all non-revolving consumer loans held by the federal government are student loans (and they mainly are).


  1. Is this possibly due to changes in the student loan program last year?

  2. Student loans are the worst type of loan that you can get.

    Students are frequently tricked into debt. Schools say "95% of our graduates are employed at $65k a year, so you can easily afford these loans". You graduate to find out that the real figure is about 65% employed at $40K a year.

    If you default, they tack on tremendous fees. In my case, well over $10k.

    You can't get out from them in bankruptcy either.

    The education industrial complex is creating a modern day underclass of indentured educated serfs.

  3. The graph is really scary as it suggests that the US is relying on the next generation of employees to leverage up and spend their lives paying off debt to offset the deleveraging now from the current working generation!

  4. Student loans are up 511% since 1999 per the Atlantic... post here: