Americans Now Owe More on Student Loans Than on Credit Cards

CreditCardGuide.com
August 31, 2010
Smith, Eva Norlyk

Credit card debt has dropped considerably over the past year and a half, falling 13.3 percent from its 2008 peak of $958.1 billion, while consumers' revolving credit dropped $4.5 billion in June alone, according to data from the Federal Reserve. In fact, consumers' outstanding balances on credit cards in June dropped below the amount owed on student loans. Americans owe $829.8 billion in student loans, compared to about $826.5 billion in credit card debt. An estimated $300 billion of those student loans have been incurred within the last four years, reflecting both the rise in education expenses as well as the inclination of many to choose to borrow money for school rather than be unemployed during today's tough economic conditions. Additionally, consumers often pay off their credit card before any other loan -- especially student loans -- because the interest rates are so much higher. Consumer advocates are especially worried about the sharp rise in student loans, which are not subject to fair lending or consumer protection practices. Student loans lack typical protections, such as statutes or limitations, truth-in-lending laws, and state usury laws; and they can turn into an intractable form of debt that stays with borrowers for a long time.
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