Cold Weather Stopped Everything But Student Loans

It just keeps growing.

Federal student loans drove outstanding consumer debt in January and February, as semesters started and tuition payments came due for millions of students across the country. Total student debt isn’t reported monthly, but the Federal Reserve puts nonrevolving debt (the kind where your balance goes down as you repay it, such as a car loan) held by the federal government at $764 billion in February, up from $757.8 billion in January and $729.8 billion in December.

Overall, nonrevolving consumer credit grew at an annualized rate of 10.1% in February, a significant jump from the already strong 7.5% annualized growth rate in January.

“They (federal student loans) were almost the entirety of the bump in January and more than the entire bump in February,” said Samuel Rines, an economist and equity analyst for Chilton Capital in Houston. In February, nonrevolving credit held by finance companies slid from $610 billion to $606.8 billion, which student loans more than made up for.

Outstanding student loan debt, including private loans, is released quarterly and reached $1.2 trillion at the end of 2013. That growing number casts a shadow this time of year, as many high school students are finalizing their college plans, figuring out financial aid and trying to decide how much debt they can reasonably expect to take on after graduating in a few years.

Student loans aren’t inherently bad — they can be very helpful in affordable doses, meaning you probably shouldn’t graduate with more debt than you expect to earn annually in an entry-level position — but too much education debt depresses consumers’ ability to reach other financial goals, like homeownership and retirement.

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Revolving debt (credit card debt, usually) was a little less exciting in February. After declining at an annualized rate of 0.3% in January, the cold continued to keep consumers indoors and spending less on their credit cards: The annualized growth rate was minus-3.4% in February.

“That negative 3.4% kind of makes sense with the weather effects that we saw in January and February,” Rines said. “You should see a bounce back to the 1% run rate you saw last year after that.”

The double-digit growth rate for nonrevolving credit isn’t likely to stick around, either.