Student Loans Fuel Expansion of Consumer Credit


Data from the Federal Reserve Board indicates that consumer credit continues to expand. According to the most recent release, the total amount of consumer credit outstanding rose by an annual rate of 5.4% in August to $3.0 trillion. In July, consumer credit rose by 4.1%.

The acceleration in consumer credit outstanding partly reflects a higher rate of growth in non-revolving credit. Per the release, non-revolving credit, which is primarily composed of student loans and auto loans, grew at an annual rate of 8.0% in August, 1.2 percentage points faster than the growth rate that took place in July. At the same time, non-revolving credit declined by 1.2%. However, the pace of decline in August was less than the 2.6% contraction that took place in July.

According to new data in the Federal Reserve’s G.19 Consumer Credit release, growth in auto loans has been accelerating on a year-over-year basis for six consecutive quarters ending in the second quarter of 2013. In the latest G.19 release, the Federal Reserve Board provided estimates, on a quarterly basis and without a seasonal adjustment, of student loans and auto loans outstanding. As the chart below illustrates, the amount of auto loans outstanding has risen at an increasing rate since the first quarter of 2012. However, growth in student loans, which has slowed in recent months, still exceeds the growth rate in auto loans. In addition, the amount of student loans outstanding, $1.2 trillion, is greater than the amount of auto loans outstanding, $841 billion. As a result, student loans have been the primary driver behind the expansion in outstanding consumer credit.


The Federal Reserve Board is a self-funded federal government agency and doesn’t rely on congressional appropriations to fund its activities. As a result, the federal agency is still operating during the “government shutdown”.


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