Fed: U.S. household debt continues to increase

Larger debts could make it difficult for borrowers to make timely payments.

New data from the Federal Reserve Bank of New York shows that U.S. borrowers took on more than $100 billion in new debts during the first quarter, pushing total household debt to $11.65 trillion.

As this blog has discussed in the past, student loans continue to be a key driver of overall consumer debt in the United States. A report from the Pew Research Center showed that almost 40 percent of all households headed by someone under 40 years old have outstanding student loans, with the unpaid debt averaging about $13,000.

Having residual student debt was also correlated with having a higher overall debt burden. Within Pew's study group, households with unpaid student loans had almost twice as much total debt as their peers. The average net worth of households without student debt was more than six times higher.

As the proportion of households with outstanding student loans continues to increase, borrowers may have more trouble keeping up with all of their financial commitments. Various proposals have been put forward for dealing with this growing problem, including a new Federal Housing Administration program aimed at helping young families and individuals purchase a home while managing their debts responsibly.

The FHA's Homeowners Armed with Knowledge program allows first-time buyers to pay lower mortgage insurance premiums if they attend counseling sessions provided by approved nonprofit organizations. This type of program can help borrowers understand their financial situation, but lenders also need to play a proactive role in ensuring that repayment plans are workable.

Loan management software can be an especially important asset for companies that have not traditionally been involved in financial services and offer loans as an addition to their primary business. For example, Standard & Poor's has reported that more home builders are becoming involved in the mortgage application process to help potential customers line up financing.