Educational Lending - US - October 2016

Educational Lending - US - October 2016

Oct 2016 Mintel EducationN/A Price :
$ 3671

As the student loan situation worsens, more people are questioning whether their college education was worth the money they borrowed to get it. This is beginning to goad aspiring students into exploring other ways to get their degree, such as going part-time or attending a less expensive two-year school before transferring to a four-year school. An increase in people making these decisions may slow down the rate increase in borrowing even more.

Table of Contents

OVERVIEW
What you need to know
Definition

EXECUTIVE SUMMARY
The issues
Almost half of Millennials have student loan debt
Figure 1: Have outstanding student debt, by generation, July 2016
Few understand their obligations
Figure 2: Understanding and repayment of loan, July 2016
Repayment is challenging borrowers’ futures
Figure 3: Repayment plans, July 2016
The opportunities
Financial advice would help
Figure 4: Repayment plans, July 2016
Credit discounts may help borrowers overcome hesitation
Figure 5: College loans affect credit decisions, by generation, July 2016
Cross-selling opportunities
What it means

THE MARKET – WHAT YOU NEED TO KNOW
Total student loan debt
Student loan default rates are higher than any other type of loan
Scholarships and grants cover one third of cost
Parents are paying a smaller percentage of college costs
A decrease in the youngest populations
Unemployment is going down, especially for college graduates
Large wage discrepancy between high school and college graduates

MARKET SIZE
Total student loan debt
Figure 6: Total student debt, Q1 2006-Q1 2016
Student loan default rates are higher than any other type of loan
Figure 7: Percentage of balance 90+ days delinquent, Q1 2006-Q1 2016

MARKET BREAKDOWN
Auto loan growth surpasses student loan growth
Figure 8: Consumer debt by type, total amount, and percentage of total debt, Q1 2011-Q1 2016
Scholarships and grants cover one third of cost
Figure 9: Typical family’s college funding sources, Academic year 2015-16
Parents are paying a smaller percentage of college costs
Figure 10: Typical family’s college funding sources, by percentage, Academic year 2010-11 through Academic year 2014-15
Federal loans are down; nonfederal are up
Figure 11: Federal vs. nonfederal loans, AY 2010-11 – AY 2014-15
Other sources of funding
Figure 12: Role of various borrowed funding sources, 2016

MARKET FACTORS
A decrease in the youngest populations
Figure 13: Populations aged 0-24 as a percentage of the total population, 2011-21
The cost of college continues to grow
Figure 14: Average college tuition and fees, 2000-01 – 2015-16
Number of college students is increasing
Figure 15: Number of students enrolled at four-year institutions, by enrollment status, 2000-24
Figure 16: Number of students enrolled at two-year institutions, 2000-24
The number of female students continues to grow
Figure 17: Number of students enrolled in degree-granting institutions, by gender, 2000-24
Unemployment is going down, even among college graduates
Figure 18: Unemployment rate, March 1, 2012 – March 1, 2016
Large wage discrepancy between high school and college graduates
Figure 19: Median annual wages for workers with high school diploma vs. bachelor’s degree, Jan. 1, 2011 – Jan. 1, 2015
Growth of 529 College Savings Plans
Figure 20: Assets in 529 plans, 2009-15
Figure 21: Number of 529 College Savings Accounts, 2009-15

KEY PLAYERS – WHAT YOU NEED TO KNOW
Inceptia creates online federal loan information course
New place to lodge consumer complaints
Discover pays $18.5 million fine
Deceived students are seeking loan forgiveness
Colleges lower tuition – But it might not help
Amazon Prime partners with Wells Fargo
Wealthfront offers robo-adviser for college savings

WHAT’S WORKING?
Loan refinancing is growing business
Inceptia creates online federal loan information course
New place to lodge consumer complaints

WHAT’S STRUGGLING?
Discover pays $18.5 million fine
Deceived students are seeking loan forgiveness
Colleges lower tuition – But cut aid
Figure 22: Chose college based on size of loan, by generation, July 2016

WHAT’S NEXT?
Amazon Prime partners with Wells Fargo
Wealthfront offers robo-adviser for college savings

THE CONSUMER – WHAT YOU NEED TO KNOW
Millennials are most likely to have debt
Hispanics are more likely to have student debt
Most have balances less than $50K
Most borrow in line with their income
Women understand loans – But it is harder for them to keep up
Men are more likely to default
Loans affect decisions on future
Men are more positive
Parents are as important as students . . . and vice versa

OUTSTANDING LOAN DEBT
Young women are less likely than young men to take loans
Figure 23: Had student loans, by gender and age, July 2016
Millennials are most likely to have debt
Figure 24: Have outstanding student loan debt, by generation, July 2016
Household income doesn’t have much effect
Figure 25: Have outstanding student loan debt, by household income, July 2016
Hispanics are more likely to have student debt
Figure 26: Have outstanding student loan debt, by race and Hispanic origin, July 2016
Parents of young children have more student debt than nonparents
Figure 27: Have outstanding student loan debt, by parental status, July 2016

TOTAL AMOUNT OF LOAN(S)
More have balances less than $50K
Figure 28: Total amount of outstanding student loans, July 2016
Men owe more than women
Figure 29: Total amount of outstanding student loans, by gender, July 2016
Older Millennials owe more
Figure 30: Total amount of outstanding student loans, by generation, July 2016
Most borrow in line with their income
Figure 31: Total amount of outstanding student loans, by household income, July 2016

UNDERSTANDING AND REPAYMENT PLANS
Women have a better understanding than men
Figure 32: Understanding of loans, by gender, July 2016
Loans are more of a hardship for women
Figure 33: Loan payments, by gender, July 2016
Men are more likely to default
Figure 34: Loan repayment plans, by gender, July 2016
Those with lower balances more likely to understand terms
Figure 35: Understanding of loan terms, by amount of loan balance, July 2016
More with higher loan balances plan action
Figure 36: Loan repayment plans, by amount of loan balance, July 2016

EFFECT OF LOANS ON BEHAVIOR
Loans affect decisions on future
Figure 37: Effect of loans on students’ decisions, July 2016
Loans have more effect on men’s decisions than on women’s
Figure 38: Effect of loans on students’ decisions, by gender, July 2016
Large loans affect career decisions
Figure 39: Effect of loans on students’ decisions, by size of loan, July 2016

SOURCE OF INFORMATION
Websites used more by those with smaller loans
Figure 40: Source of information about loans, by amount of loan, July 2016
Men are easier to reach than women
Figure 41: Source of information about loans, by gender, July 2016

EXPERIENCE AND ATTITUDES TOWARD STUDENT LOANS
Men are more positive
Figure 42: Lending attitudes/experience, by gender, July 2016
Women need more information
Figure 43: Satisfaction with loan education, by gender, July 2016
Parents are as important as students . . . and vice versa
Figure 44: Parents should be involved, by household income, July 2016
Figure 45: Discover direct mail ads, 2016
Parents should be involved, especially when loans are large
Figure 46: Parents should be involved, by size of loan, July 2016

APPENDIX – CHAID ANALYSIS
Methodology
High earning young people are good targets for advisors
Figure 47: Have outstanding student loan debt – CHAID – Tree output, July 2016
Figure 48: Student loan debt– CHAID – Table output, July 2016

APPENDIX – DATA SOURCES AND ABBREVIATIONS
Data sources
Consumer survey data
Direct marketing creative
Abbreviations and Terms
Abbreviations
Terms

APPENDIX – MARKET
Figure 49: Total US population by age, 2011, 2016, 2021

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