"As college tuitions and the amount of money people have to borrow to finance education rises in coming years, the already high burden from student loans will continue to weigh even more heavily on consumers' ability to spend for major purchases," says Jordan Goodman, spokesperson for the Index.
In September, the "Reality Gap" based upon the difference between the amount of debt consumers say they will pay off compared to the amount of debt they actually pay off a month later surged by 6 points to 16 percentage points from August, almost back to its record level of 17 points in July. In August, 80% planned to pay off debt, while only 64% actually did so.
In conjunction with the Index, the Cambridge Credit Counseling Corporation is releasing its monthly survey of people who have called it for credit counseling services over the past month. Cambridge representatives ask callers for the primary reason that they found it necessary to get help with their debts now. Of the 1554, people who answered, this was the order of their responses:
In September, 32% of Americans plan to take on more debt to make purchases, with 9% taking on a lot of debt and 24% taking on a little more debt. In contrast, 68% of Americans plan to pay off debt in the next six months, with 45% expecting to pay off a little and 23% expecting to pay off a lot. In August, 31% of Americans planned to take on more debt, while 69% planned to pay off debt.
"The September Index results show that while consumers continue to have high hopes that their use of debt will decrease, in fact they are being forced to take on significantly more debt to meet their living expenses," says Jordan Goodman, spokesperson for the index.