RISING STUDENT DEBT WEAKENS CREDIT STORY

The rebound in consumer credit has been fueled in part by a leap in the amount of student debt outstanding. While things like credit card debt and auto loans have been increasing, the rate of growth in student loans has been stronger according to the Fed's data. This is in part due to a 2010 change in which the federal government took over much of the student-loan business from private lenders, boosting one measure contained in the Fed's consumer-credit data. But other, wider measures of student loanss also show big increases. Overall student debt is nearing $1 trillion and is now the second largest form of consumer debt behind mortgages. Student loans have increased as the recession pushed workers to go back to school or students to stay longer. There is good reason of this: Workers with higher education suffer lower rates of unemployment and generally earn a long-term economic benefit. In the short-term, however, student loans don't juice the economy in the same way as increases in credit card debt. Exclude student debt from the Fed's consumer credit data and the total is actually down more than 15% from it 2008 peak. Look at the way, consumers aren't really borrowing and spending as much as the headline consumer-credit figure would suggest. This dovetails with personal income data showing that while incomes are rising, expenditures are flat. This restraint is contributing to the sluggish pace of economic growth but it may still be awhile before consumers can really shop.