U.S. consumer borrowing unexpectedly fell in August by the largest amount in more than three years, reflecting a record decline in non-revolving credit tied to the Biden administration's forgiveness of student loans.
Total credit fell by $15.6 billion, according to Federal Reserve data on Friday, which are not adjusted for inflation. The median estimate in a survey of economists was for an increase of $11.7 billion.
Non-revolving credit, such as loans for tuition and vehicle purchases, fell by a record $30.3 billion. The unadjusted figures show that the federal government's outstanding loans, which are mostly student loans, fell by nearly $27 billion.
In August, the U.S. Department of Education began forgiving $39 billion in student loan debt for more than 800,000 borrowers. President Biden has been looking for a replacement for the $400 billion student loan forgiveness program that was struck down by the Supreme Court in June. Although student loan payments officially resumed this month, data shows that borrowers have paid off billions of dollars of debt before the deadline.
The Fed report also showed that outstanding revolving credit, which includes credit cards, increased by $14.7 billion, the largest increase since November.