Consumer Credit Rebounds in March, But Rising Student Debt Signals Risks — Evening Brief – 05.08.25 

Consumer debt rebounded in March, rising $10.2 billion according to data released by Federal Reserve late Wednesday, slightly above the $9.4 billion forecast. This follows a shocking February contraction of $0.6 billion, against expectations of a $15 billion increase, driven by flat or negative revolving and non-revolving credit, signaling strained consumer finances. 

March’s growth is a return to normalcy, but the composition of this rebound presents mixed signals, as student debt surged, while credit card borrowing and auto loans remained weak. Revolving credit (credit card debt) grew by $1.9 billion, recovering from February’s $0.3 billion decline but marking the smallest gain since December 2024 (excluding February). Non-revolving credit surged $8.3 billion, the second-largest monthly increase since July 2024, propelled by a $22 billion spike in student debt. 

This student debt surge, reaching a record $1,797 billion, raises concerns. The end of the student loan repayment moratorium has driven higher defaults, potentially curbing consumer spending and increasing household financial stress. Meanwhile, auto loans fell by $10 billion in Q1 2025, the largest quarterly drop in a decade, possibly reflecting lower confidence, rising borrowing costs, or a shift away from major purchases. 

While March’s credit growth offers relief after February’s contraction, underlying vulnerabilities persist. The reliance on student debt for the rebound, coupled with subdued revolving credit and a sharp auto loan decline, points to a fragile consumer base. Rising student debt defaults and reduced auto lending could signal broader economic softening, impacting sectors like manufacturing and retail. The data suggests stabilization but highlights ongoing challenges for consumer financial health.