Consumer borrowing rises, led by more auto and student loans

Lindsey Burke, Director of Center for Education Policy and Will Skillman Fellow in Education, explains how government-serviced student loans and, in part, many students' choices for college majors, are harming the economy.

WASHINGTON (AP) — Consumer borrowing rose in September at a modest pace, led by higher student and auto loans, though a category that mostly includes credit cards fell for the second straight month.

The Federal Reserve says that overall consumer borrowing increased 2.8% to $4.15 trillion. A category that covers student and auto loans rose 4.2%, while credit card debt fell 1.2%.

Americans are spending at a solid pace but in recent months have relied less on borrowing. Steady, if modest, income growth has enabled consumers to shop more while also stepping up saving. A separate government report showed that spending rose in September, but incomes increased more, lifting the savings rate to 8.3%, the highest in six months.

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Consumer borrowing is closely watched for signs about the strength of consumer spending.