The Federal Reserve’s Consumer Credit G.19 report shows that the United States government now holds more non-revolving consumer debt than commercial banks in the U.S. The on-revolving debt, also known as installment debt, received a boost from the number of government-issued student loans since 2009. The last three years have led to the marked increase in the amount of installment debt that the government holds. Some of this debt stems from loans from Department of Education under the Federal Direct Loan Program, as well as Federal Family Education Loan Program loans purchased from banks and finance companies.
According to the report, the government now holds a total of $552.69 billion in student loans. Commercial banks, on the other hand, hold $545.7 billion in non-revolving consumer credit.
Using data from the Federal Reserve and global information company IHS, this chart from the NBF Economy and Strategy Group shows how drastic the jump in student loans has been:
To put it into simpler terms, if you took student loans out of the equation, non-revolving credit would have increased by 2.9 percent and not 24 percent annually. Student loans account for 28 percent of the non-revolving credit outstanding. This amount of debt can become a problem in the future if employment prospects don’t improve for students. What can you do about student debt? We have live representatives available to answer your student loan questions. We’ll also continue to follow this issue and provide you with up to date information and opinions from leading financial experts.