Smart Borrower Blog

Archive for the ‘Student Borrowing’ Category

Student Loan Interest Rate Increase Looms Near

Congress has just six weeks to act before subsidized student loans become a little more expensive. The interest rates on federal student loans are set to double July 1, potentially making it tougher for some students to afford their college tuition. Subsidized Stafford loans, available only to undergraduates now, will soon carry an interest rate of 6.8 percent, twice the current, ultra-low 3.4 percent. This change will affect the more than 7 million students who take out Stafford and other federal loans each year. The increased rate will add an extra $1000 in debt to a one-year student loan, according... more »

Student Loan Debt – the Next Big Economic Crisis?

Americans now hold over $1 trillion in student loan debt, a growing figure which has recently surpassed total U.S. credit card and auto loan debt. As college tuition and fees continue to rise, could this overwhelming debt burden turn out to be the next big financial crisis? Average student loan debt has reached $25,000, according to the Project on Student Debt, up 25 percent in the past decade. And with roughly a quarter of recent graduates unable to find jobs, that debt burden is rapidly becoming too heavy for many to repay. Almost 30 percent of all student loans have... more »

Student Loan Debt Continues to Outpace Credit, Auto Debt

Americans have more invested in student loans than they do in car loans or on their credit cards, according to new information from the economists at the Federal Reserve Bank of New York. While this has been a trend for many months, student loan debt in the third quarter of 2011 now totals $870 billion for Americans across the country, representing a 2.1 percent increase from the second quarter. And as the New York Fed economists wrote on their blog , “With college enrollments increasing and the costs of attendance rising, this balance is expected to continue its upward trend.”... more »

Credit Card Use Jumped in December

U.S. consumers pulled out their plastic in greater numbers for purchases in December, according to information from the Federal Reserve Tuesday. Total credit debt increased substantially as well. Revolving credit, such as credit card debt, grew by $2.76 billion in December to $800.98 billion, after rising $5.58 billion in November. Non-revolving credit, driven by student loans and auto loans, posted a $16.55 billion increase, to $1.697 trillion, also following a major jump in November. Total consumer credit debt rose by $19.31 billion in December, a striking increase compared with a prediction from economists surveyed by the Dow Jones Newswires that... more »

Fed Keeps Rate At Rock Bottom, No Changes Likely Until 2014

After its two day meeting, the Federal Reserve decided to leave its target interest rate unchanged, and also forecasted that it will not raise rates until the end of 2014. The federal funds rate, the Fed’s main method of affecting inflation and the economy, will remain in the range of zero to 0.25 percent for at least the next six weeks. It was predicted in a statement that, “Economic conditions…are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.” Low Fed rates have kept mortgage, car and student loan rates exceptionally low for... more »

Consumer Borrowing Makes Biggest Jump since 2001

Consumers borrowed money at a higher rate in November than they have in a decade, according to the latest report from the Federal Reserve. Total consumer borrowing grew $20.4 billion in November to $2.48 trillion, posting the largest monthly gain since November 2001 when loans increased by $28 billion. The new total is almost back up to pre-recession levels and significantly above the September 2010 decrease of $2.39 billion. Credit card borrowing and other revolving credit accounts jumped up $5.6 billion, the largest increase since March 2008 and the third consecutive monthly gain. Auto loans also rose $14.8 billion, almost... more »

Middle Age Students Taking Out More Loans

Students in the middle-age bracket are accumulating college loan debt at a faster pace than any other age, according to analysis from Reuters, standing as another visible effect of the sluggish economy. The Reuters data found that while borrowing is up among all student age groups, it has really skyrocketed in the past three year among those who are between ages 35 and 49. Borrowing was up 47 percent for that age category, according to information Reuters obtained from credit tracking firm Credit Karma. The increase can be attributed, Credit Karma reports, to the turbulent economy that has found many... more »

Consumer Borrowing, Credit Card Use Up in October

Consumers continued to borrow more money in October, according to the latest figures from the Federal Reserve, and the trend could suggest either progress or danger. Total consumer credit grew by $7.6 billion to $2.457 trillion, outpacing September’s $6.88 billion increase. Americans have upped their spending and borrowing for 12 of the past 13 months, with August being the notable trend-breaker. Borrowing during that month fell by the most in 16 months. Still, in general U.S. consumers have been taking on more debt. Non-revolving credit, including student loans and car loans, rose 5.3 percent, or $7.28 billion in October. This... more »

Consumer Borrowing Makes Surprising Jump

Consumer credit borrowing in the U.S. increased substantially in September from the previous month, spurred on by rises in student and auto loans. Borrowing rose by $7.39 billion to a total of $2.542 trillion, according to the Federal Reserve. This was a particularly surprising increase after consumer credit fell $9.68 billion August, and analysts only predicted a growth of $4 billion for September. The increase was apparently led by a jump in borrowing for items like cars and tuition. Non-revolving credit, which includes both those types of loans rose $8.01 billion in September to a total of $1.662 trillion. Revolving... more »

Student Loan Debt Reaches Record Levels

Total student loan debt in the U.S. has surpassed national credit card debt, according to new figures from the Federal Reserve Bank of New York. New student loan funds borrowed last year grew to $100 billion dollars, a record high, and now total outstanding student loan debt has reached $1 trillion for the first time in history. Full-time undergraduate students borrowed an average of $4,983 last year, according to the College Board. That figure is more than double the average from 10 years ago, after adjusting for inflation. In the wake of the current economy, default rates on student loans... more »