Deleveraging seems to be a thing of the past….
A chart to put things into perspective…
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I don’t agree with the writer’s position that growth in credit for student loans finances consumption in the same way that growth in other non-revolving credit does.
That’s an important point of difference, because growth in student loans accounts for pretty much all growth in non-revolving credit.
See these links, for example:
http://econintersect.com/wordpress/?p=19713
http://econompicdata.blogspot.com/2011/12/consumer-credit-excluding-student-loans.html
The writer’s position implies that students are choosing to finance a growing portion of their school expenses so that they have an increasing amount of cash to spend on current consumption. My belief is that a large portion of the growth in student debt reflect very rapid growth in tuition at state schools as states make large cuts in funding for higher education.
I haven’t looked for or seen data confirming my belief, but I have seen plenty of data on cuts in higher education and the resulting increases in tuition at public colleges and universities.
Repost of a comment supposedly stuck in moderation limbo.
ottnott says:
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March 22, 2012 at 4:51 pm
I don’t agree with the writer’s position that growth in credit for student loans finances consumption in the same way that growth in other non-revolving credit does.
That’s an important point of difference, because growth in student loans accounts for pretty much all growth in non-revolving credit.
See these links, for example:
http://econintersect.com/wordpress/?p=19713
http://econompicdata.blogspot.com/2011/12/consumer-credit-excluding-student-loans.html
The writer’s position implies that students are choosing to finance a growing portion of their school expenses so that they have an increasing amount of cash to spend on current consumption. My belief is that a large portion of the growth in student debt reflect very rapid growth in tuition at state schools as states make large cuts in funding for higher education.
I haven’t looked for or seen data confirming my belief, but I have seen plenty of data on cuts in higher education and the resulting increases in tuition at public colleges and universities.