ATLANTA (5/22/13)--Student loans increased nearly 27%, to $11.7 billion in February from $9.2 billion in February 2012, according to Equifax's most recent National Consumer Credit Trends Report.
That reaffirms the results of the Credit Union National Association's Student Borrowing Survey, which found that student debt is increasing, with half of high school seniors having no idea what college will cost or how debt works and indicating many lack basic financial knowledge. CUNA surveyed 846 teens age 17-18 last month.
"Student borrowing continues to increase rapidly, and well beyond just tuition increases as more and more people are attending colleges and professional training," said Equifax Chief Economist Amy Crews Cutts.
"In the past, some students might have relied on their parents who would have funded tuition payments using home equity lines of credit, but the small volume of home equity lending that is occurring today, at a little over $12 billion, is not sufficient to cover those costs."
Overall, new credit generated during January-February 2013 was $141 billion--the highest balance for that time period in five-years--and an increase of more than 33% over recession lows of $94 billion originated during January-February 2010.
New credit balance changes year-to-date in February 2013 versus February 2012 were:
Home equity lines of credit increased nearly 16%, to $12.4 billion from $10.7 billion; and
Auto loans rose more than 13%, to $69.6 billion from $61.5 billion.
"The rise in auto loans is reflecting the strong demand for new cars and light trucks, which increased almost 9% over the same time a year ago," Cutts said.
"On a year-to-date basis through February, auto loan origination activity this year is the strongest it has been for banks since Equifax began tracking this information in 2006, totaling $35.6 billion, and the second strongest showing for non-bank auto financing companies at $34 billion. Consumers are tired of their old, patched-up cars and demand is really starting to pick up.
"At the same time, there is a slight increase in the willingness of lenders to finance car purchases for consumers with less than perfect credit," she added.
Other highlights from the most recent data include:Student Loans
The total new credit balances for February, year-over-year 2012-2013, nearly 29%--to $5.1 billion from $4 billion.
The total number of new loans increased nearly 9%, from 3.2 million in February 2012, to 3.5 million in February 2013, the highest in more than seven years.
Home Equity Revolving
By source, bank-funded auto loans increased more than 12% from February 2012 to February 2013--to $17.4 billion from $15.4 billion, while auto finance company-funded loans increased less than 3%, to $17.9 billion from $17.4 billion.
The total number of new loans year-to-date in February 2013, are 130,200, a year-over-year increase of more than 11%.
Year-over-year, the total balance of new credit increased more than 11%, to $6.3 billion in February 2013 from $5.6 billion the year before.