Thrift Savings Plan participants slowed their loan withdrawals in October, and the board governing the plan hopes that "slight easing" is a sign that loan activity is about to start shrinking.

Federal employees had nearly $7.2 billion in outstanding loans in October — $8 million more than the previous month. That's the slimmest increase since May 2008, which was the last month that the total amount of outstanding loans declined. Prior to October, the total outstanding loan balance increased anywhere from $11 million to $95 million each month over the last year.

"I'm hoping that will at least level out, as opposed to continuing to inch up," Renee Wilder, director of the Federal Retirement Thrift Investment Board's Office of Research and Strategic Planning, said at the board's meeting Nov. 16.

The number of loans continues to increase, however. TSP participants had more than 805,000 loans in October — about 4,000 more than in September. That shows that while participants are continuing to borrow money to buy homes, pay college tuition, or repay other debts, they are taking out less money or are repaying their loans.

Board Chairman Andrew Saul suspects that economic problems stemming from the recession have driven federal employees to take out more loans.

TSP participants can borrow between $1,000 and $50,000 from their TSP accounts. Borrowers make regular payments through payroll deductions. Borrowers also pay interest rates that are equal to the G Fund rate at the time of the loan, but interest payments go into the borrower's TSP account.

TSP's stock-based C, S and I funds also declined in October, by 1.86 percent, 5.51 percent and 2.41 percent, respectively. October marked the first time the C and S funds have declined since February. The I Fund previously dropped in February and June.

But those funds have largely regained those losses in the first half of November, Chief Investment Officer Tracey Ray said. The C Fund is currently up 5.7 percent, the S Fund is up 5.12 percent and the I Fund is up 4.94 percent.

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