Even as U.S. consumers try to pay down debt, students have taken out an unprecedented number of loans, with negative long-term implications for the housing and auto markets.
Student loans outstanding are up about 50 percent since 2007 at $562 billion, according to data that Equifax, one of the largest U.S. credit bureaus, provided exclusively to Reuters.
The data is based on Equifax's 200 million-plus files of U.S. consumers using credit.
"This generation of students will be less able to buy their first home given their debt load," said Dann Adams, president of Equifax' U.S. Consumer Information Solutions. "Their largest payment will be their student loan."
Students have taken out $55 billion in loans in the past year, Adams said. Such a debt burden could also make it harder for former students to buy cars.
"We've never seen these levels of debt for student loans," said Adams. He attributed the spike to the recession, which has kept students in school for lack of a job and also caused states struggling with less tax revenue to cut funding for higher education.
"Already high student debt loads will probably increase substantially as tuition rates continue to rise across the nation," Adams said.
Adams sees no end to the upward student loan trend, especially after Tuesday, when President Barack Obama signed into law a student lending overhaul that cuts commercial banks out of the business altogether while expanding the federal Pell Grant program and capping loan repayments at 10 percent of a graduate's salary, down from 15 percent.
"The government is going to be more inclined to extend credit" than commercial banks, Adams said. By contrast, total consumer debt has fallen by $590 billion, or 5.1 percent, to $11 trillion since a peak of October 2008.
Lenders are extending less credit and borrowers are asking for less, as well. Year-to-date, the number of new bank-issued credit cards is down by more than half since 2007, to 32 million from 69.6 million, according to Equifax.
Between December 2007 and 2009, the amount of credit available in home equity lines fell 70 percent to $5.3 billion.
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