By Leah Schnurr

NEW YORK, May 31 (Reuters) - U.S. consumer debt fell in the first three months of the year as Americans made further inroads in paying down credit in all areas but student loans, which rose during the quarter, the New York Federal Reserve Bank said on Thursday.

Total consumer debt fell 0.9 percent to $11.44 trillion in the first quarter, compared with the fourth quarter of 2011, the New York Fed said in its quarterly Household Debt and Credit report.

But student loan debt, the largest component of household debt other than mortgages, rose 3.4 percent to $904 billion in the first quarter of 2012, compared with the final three months of 2011.

During the year leading up to the end of March, student loan balances rose $64 billion, while all other forms of household debt fell a combined $383 billion.

"Student loan debt continues to grow even as consumers reduce mortgage debt and credit card balances," Donghoon Lee, senior economist at the New York Fed, said in a statement.

"It remains the only form of consumer debt to substantially increase since the peak of household debt in late 2008."

Debt levels ballooned during the housing bubble, partly as soaring home values let Americans take out large loans against their properties.

While consumers have been whittling down that debt in recent years, student loans have been on the rise. The high unemployment rate has prompted more people to go back to school for retraining, which has contributed to loan demand.

Since household debt peaked in the third quarter of 2008, student loan debt has climbed by $293 billion, while other types of debt have dropped by $1.53 trillion, the Fed report said.


CAMPAIGN ISSUE

The rise in student loan debt has prompted concerns as to whether new graduates will be able to keep up with payments as they face a difficult job market.

Student loan debt has also become a theme in the U.S. presidential election as lawmakers consider how to prevent interest rates on loans from doubling to 6.8 percent.

The parties are expected to reach a deal before the rate increase goes into effect on July 1.

Mortgage balances fell 1.0 percent, while balances on home equity lines of credit dropped 2.4 percent, the regional Fed bank said.

Mortgage originations rose to $412 billion in the quarter, while about 1.8 percent of mortgages fell into delinquency, continuing the improvement seen at the end of last year.

Total household delinquency rates also improved, falling to 9.3 percent from 9.8 percent in the fourth quarter.

Credit card limits were slightly lower, down 0.4 percent, while the number of open credit card accounts held steady at 386 million.

Balances on credit cards were $679 billion, down more than 20 percent from the peak of $866 billion seen in the final quarter of 2008.

The number of credit account inquiries over six months - an indicator of consumer credit demand - slipped 0.5 percent.