Aggregate Consumer Credit Falling, Federal Student Lending Increasing

June 13, 2012 at 11:29 AM
The latest Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit confirms what every bank already knows: total outstanding consumer debt has fallen by nearly 10 percent since reaching a high of $12.675 trillion in the third quarter of 2008. This decline has been driven by a reduction in credit card debt, auto loan debt, revolving home equity lines, and mortgages. Given this contraction, it is not surprising that so many banks are expanding their commercial lending operations.
The one exception to this rule is student lending. According to the report, outstanding student loan balances grew 41 percent from the end of 2008 to reach a total value of $904 billion in the first quarter 2012. However, private lenders are contributing less to overall student lending. Instead, the federal government has taken on an increasingly larger portion of the debt, backing nearly 93 percent of the volume in 2011.

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