Roundup: U.S. consumer borrowing slows in May; Corinthian seeks to reassure students; more
Consumer borrowing rises at slower pace in May
Consumers increased their borrowing at a slower pace in May compared with the prior month. Overall credit rose by $19.6 billion in May, down from a gain of $26.1 billion in April, the Federal Reserve said on Tuesday. The relatively modest increase should help to feed slow but steady economic growth, because consumers rely on debt to pay tuition, buy cars and shop. Total outstanding consumer debt is approaching $3.2 trillion. Auto and student loans drove much of the gains in May. They increased by a combined $17.8 billion. That marks a year-over-year rise of 9.3 percent. Credit card debt, which surged in April, rose by a slight $1.8 billion in May. The increase in credit card debt over the past year has been 2.5 percent. Increased borrowing usually suggests that people are more confident about their prospects and willing to take on debt. That, in turn, can help drive consumer spending, which accounts for 70 percent of the nation's economic activity.
Corinthian seeks to reassure students
A for-profit education company sought to reassure nervous students on Tuesday that they'll be able to finish their degrees even though their campuses are being closed amid concerns from the Education Department about its practices. Santa Ana, Calif.-based Corinthian Colleges Inc. announced that the campuses being closed operate under the Everest name and are scattered throughout 11 states. The company is under multiple state and federal investigations. Corinthian reached an agreement with the Education Department late last week that has it shutting down those campuses and putting 85 U.S.-based campuses up for sale. About a dozen in Canada will be sold. The company was informing the 3,400 students at the affected campuses that if they have started taking classes, they will be able to earn degrees. Operations at the campuses will wind down gradually, Corinthian spokesman Kent Jenkins said.
Other business news
• Dutch electronics maker Royal Philips said its health care business, which owns Philips Respironics in Murrysville, will be overseen by CEO Frans van Houten as the company tries to improve performance of the division. The change, which Philips said streamlines management, occurred after the division's CEO, Deborah DiSanzo, left the company. Philips Healthcare generates about 40 percent of the company's total revenue.
• Mylan Inc. received Food and Drug Administration approval to begin selling Telmisartan, a generic blood pressure medication. Cecil-based Mylan said Telmisartan is a copy of Micardis, made by German drugmaker Boehringer Ingelheim. It had U.S. sales of $259.2 million in the 12 months ended March 31.
— Staff and wire reports