Americans shed credit card debt in the month of March, but added to their student loan debt burden, according to Federal Reserve data released today. Learn more about the looming student debt crisis.
Americans shed $1.7 billion in credit card debt in the month of March, but added $9.7 billion in non-revolving debt, primarily for car and student loans, the Federal Reserve reported today.
Revolving – or credit card debt – was $846.2 billion in March, a decrease of 2.4 percent from February, according to the Fed, while non-revolving debt increased 5.9 percent to more than $1.96 trillion. Student loan debt represents more than $1 trillion of this revolving debt, according to March estimates from the Consumer Finance Protection Bureau or CFPB.
What do Americans have to say about the growing student debt crisis? Click here to find out.
“Unlike other consumer credit products, student debt keeps growing at a steady clip,” Rohit Chopra, student loan ombudsman for the CFPB, said in a statement. “If current trends continue, there will be consequences not just for young people, but for all of us.”
Heavy student loan debt levels may prevent young adults from qualifying for other types of credit, including home mortgages. The resulting loss in purchasing power could slow the U.S. housing recovery and overall economic growth.
Roughly 60 percent of students attending American colleges borrow money each year to cover educational costs, according to the website American Student Assistance. The average student loan debt has increase 58 percent since 2005 to more than $27,253 today, according to a recent report by FICO Labs.
As Americans pile on student debt, the student loan default rates continue to rise, according to a September report from the U.S. Department of Education. More than 9 percent of borrowers facing their first student loan repayments between Oct. 1, 2009 and Sept 30, 2010 had defaulted on the loans by Sept. 30, 2011. That’s 375,000 of 4.1 million borrowers from nearly 6,000 institutions. Default rates are highest for students attending for-profit institutions and lowest for borrowers attending private, non-profit schools.
To learn more about the spike in student loan delinquency rates, click here.