US consumer credit increases at slower pace June

By WTOP Staff
August 7, 2014 | 6:36 PM

JOSH BOAK
AP Economics Writer

WASHINGTON (AP) — U.S. consumers expanded their borrowing at a slower rate in June compared to the prior month.

Overall credit rose by $18.3 billion in June to a total of $3.17 trillion, the Federal Reserve said Thursday. The rise was down from a gain of $21.5 billion in May.

The smaller increase suggests that consumers remain sheepish about spending, which could limit how fast the economy can grow. Rising debt loads are generally a sign of greater confidence in the economy and fuel faster growth.

Auto and student loans drove much of the gains in June, up $16.2 billion. They have risen 8.4 percent year-over-year.

Credit card debt increased by a slight $2.1 billion in June. The increase in credit card debt over the past year has been 1.3 percent, evidence that consumers are restrained.

Americans still have a limited appetite for debt after gorging themselves on sub-prime mortgages and credit cards before recession seized the country in late 2007.

When the rate of borrowing increases, growth usually accelerates. People increase their spending on the assumption that they will have income to repay the debt, kicking off a cycle that leads the economy to grow faster and potentially overheat.

The most recent credit cycle was broken by the housing bust and the Great Recession. Millions of people lacked the income to pay their mortgages, in some cases because they lost their jobs following the downturn that began in late 2007.

Over the five years in which the country’s economy has rebounded, Americans have remained hesitant to take on debt. Consumer spending growth has averaged a tepid 2.2 percent a year during the recovery, compared to a 2.9 percent average during the previous expansion.

The average household debt-to-income ratio has fallen to 77 percent from the 2008 peak of 95 percent, according to analysis by the bank HSBC. That debt ratio remains higher than the 69 percent average in 2001.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
July 14, 2026 | 6:30 PM

Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers

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