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The Financial Lives of College Students - US - January 2017

"College students are typically just beginning their financial journey into adulthood. Their key financial behaviors are not yet established, and they are still looking for a more traditional banking experience. It is important to realize that investing is still somewhat of a mystery to this age group, but they are actively monitoring their everyday financial account. While interested in technology, mobile banking is still not the main method of bank transactions for college students, revealing a ripe opportunity for education. These consumers are not willing to exchange their happiness for financial gain, so financial services brands have the opportunity to show how financial planning and expertise can help enhance their personal lives."

Jennifer White Boehm, Associate Director - Financial Services

This report looks at the following areas:

  • Student loan debt continues to rise
  • Those under 25 are outspending their earnings
  • Students are concerned about making enough to live on their own
  • Portion of students do not feel appreciated by the financial services industry

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

          • The issues
            • Student loan debt continues to rise
              • Figure 1: Total student debt, Q1 2010-Q3 2016
            • Those under 25 are outspending their earnings
              • Figure 2: Average income and average expenditures, by age, 2015
            • Students are concerned about making enough to live on their own
              • Figure 3: Top two financial concerns of college students, October 2016
            • Portion of students do not feel appreciated by the financial services industry
              • Figure 4: Financial institution interest in college students, October 2016
            • The opportunities
              • There is an interest in investing
                • Figure 5: Interest in learning more about investing, October 2016
              • Students are looking for a traditional banking experience
                • Figure 6: Importance of having a bank branch near home, October 2016
              • In valuing personal time, show how savings can enhance personal experiences
                • Figure 7: Importance of having a lot of money, by gender, October 2016
              • Highlight the uniqueness of young financial customers
                • Figure 8: How older iGens and Millennials see themselves, February 2016
              • What it means
              • The Market - What You Need to Know

                • There are more than 20 million college students in the United States
                  • Female students outnumber males
                    • Students have borrowed an average of over $8,000
                      • Consumers under 25 are outspending their income
                      • Market Breakdown

                        • Over 20 million college students in the United States
                          • Figure 9: Projected enrollment* at postsecondary institutions, 2016-2024
                        • More college students are full time
                          • Figure 10: Projected enrollment* at postsecondary institutions, by attendance status, 2016-24
                        • Female students outnumber males
                          • Figure 11: Projected enrollment* at postsecondary institutions, by gender, 2016-24
                        • More than half of college students are White, followed by Hispanic
                          • Figure 12: Projected enrollment* at postsecondary institutions, by race and Hispanic origin, 2016-24
                      • Market Factors

                        • Outstanding student loan debt over $1.2 trillion in 2016
                          • Figure 13: Total student debt, Q1 2010-Q3 2016
                        • Students have borrowed an average of over $8,000
                          • Figure 14: Role of various borrowed funding sources, 2016
                        • College graduates earn more after graduation
                          • Figure 15: Median annual wages for workers with high school diploma vs bachelor’s degree, Jan. 2011- Jan. 2015
                        • Consumers under 25 are outspending their income
                          • Figure 16: Average income and average expenditures, by age, 2015
                      • Key Players – What You Need to Know

                        • One third of students don’t feel appreciated by financial institutions
                          • DOE adds new regulations to help students
                          • What’s Working?

                            • College students are interested in learning about investing
                              • Acorns
                                • Students are confident in their ability to manage their own finances
                                  • Ally’s “Splurge Alert”
                                    • Figure 17: Ally “Splurge Alert” email, April 2016
                                  • DOE adds new regulations to help students
                                    • CFPB releases safe student account scorecard
                                    • What’s Struggling?

                                      • Students are worried about making enough to live on their own
                                        • One third of students don’t feel appreciated by financial institutions
                                          • Only half of students trust the banking industry
                                            • Students not interested in nontraditional banking alternatives
                                            • What’s Next?

                                              • Student loan debt continues to rise
                                                • Should colleges adopt a fiduciary standard?
                                                  • Companies offering innovative ways to pay down student debt
                                                    • Future Fuel
                                                      • PNC RepayReady
                                                        • Volunteer to pay down loans
                                                          • Snapchat looks to use its technology for robo-advising
                                                          • The Consumer – What You Need to Know

                                                            • Only half trust the banking industry
                                                              • Most college students have a checking and/or savings account
                                                                • Students understand the importance of starting early
                                                                  • Students are still looking for a traditional bank branch experience
                                                                    • Money is for security, but not at the expense of personal time or happiness
                                                                      • Investing is still somewhat of a mystery
                                                                      • Account Ownership

                                                                        • Most college students have a checking and/or savings account
                                                                          • Figure 18: Financial account ownership, October 2016
                                                                        • Majority of students have their own account
                                                                          • Figure 19: Financial account ownership, October 2016
                                                                        • College students more likely to have credit than prepaid
                                                                          • Figure 20: Financial account ownership, October 2016
                                                                      • Financial Behaviors

                                                                        • Students are actively monitoring their finances
                                                                          • Figure 21: Banking behaviors, monitoring finances, October 2016
                                                                        • Debit used more often than credit
                                                                          • Figure 22: Banking behaviors, debit card preference, October 2016
                                                                        • Mobile banking remains popular with college-aged consumers…
                                                                          • Figure 23: Download and use of mobile banking app, by age, June 2016
                                                                        • …but mobile is not their main method of banking
                                                                          • Figure 24: Banking transactions via mobile or bank website, October 2016
                                                                        • More than half are able to save on a monthly basis
                                                                          • Figure 25: Banking behaviors, monthly savings, October 2016
                                                                      • What are Students Paying for?

                                                                        • One third of students share college expenses with parent/guardian
                                                                          • Figure 26: Who pays for college expenses, October 2016
                                                                        • Most students are paying for their own entertainment while at school
                                                                          • Figure 27: Who pays for entertainment expenses, October 2016
                                                                        • Philadelphia Federal Credit Union “Enjoy a Bite to Eat” offer
                                                                          • Figure 28: PCFU “Enjoy a bite on us” direct mail, August 2016
                                                                      • Attitudes toward Money

                                                                        • Money is for security, but not at the expense of personal time or happiness
                                                                          • Figure 29: Importance of having a lot of money, by gender, October 2016
                                                                        • Family is more a trusted financial source than friends
                                                                          • Figure 30: Importance of having a lot of money, by gender, October 2016
                                                                        • Most college-aged consumers not recommending financial services providers
                                                                          • Figure 31: Likelihood to recommend financial services provider, among 18-24s, January 2015
                                                                      • Attitudes toward Finances

                                                                        • Students understand the importance of starting early
                                                                          • Figure 32: Importance of starting to save early in life, October 2016
                                                                        • Students are confident in their ability to manage their own finances
                                                                          • Figure 33: Confidence in managing day-to-day finances, October 2016
                                                                        • Students express a preference for debit over credit
                                                                          • Figure 34: Using and managing debit or credit cards, October 2016
                                                                        • Investing is still somewhat of a mystery
                                                                          • Figure 35: Opinion of investing in the stock market, October 2016
                                                                        • Most are interested in learning more about investing
                                                                          • Figure 36: Interest in learning more about investing, October 2016
                                                                      • Where do Students Want to Bank?

                                                                        • Students are still looking for a traditional bank branch experience
                                                                          • Figure 37: Importance of having a bank branch near home, October 2016
                                                                        • Mixed opinions on new banking alternatives
                                                                          • Figure 38: Opinion on alternative banking options for ease-of-use, by gender and race, October 2016
                                                                          • Figure 39: Ally Bank ad, “We’re just like you”, December 2016
                                                                        • Trust and satisfaction levels with their personal FSI are high
                                                                          • Figure 40: Satisfaction with bank/credit union, October 2016
                                                                        • Students do not want extra correspondence from their FSI
                                                                          • Presence of adviser at bank/credit union is appreciated
                                                                          • Attitudes toward the Banking Industry

                                                                            • Only half trust the banking industry
                                                                              • Figure 41: Trust in banking industry, by gender, October 2016
                                                                            • One third don’t believe FSIs value college students’ business
                                                                              • Figure 42: Financial institution interest in college students, October 2016
                                                                          • What Happens After Graduation?

                                                                            • Making enough money is a top concern
                                                                              • Figure 43: Top two financial concerns of college students, October 2016
                                                                              • Figure 44: Top five financial concerns of college students, October 2016
                                                                            • Students not concerned about investing and insurance yet
                                                                              • Figure 45: Investment and insurance financial concerns, October 2016
                                                                            • More than a third already thinking about home, graduate school savings
                                                                              • Figure 46: Savings and loan payment financial concerns, October 2016
                                                                              • Figure 47: Discover student loan direct mail (statement mailing), November 2016
                                                                          • Appendix – Data Sources and Abbreviations

                                                                            • Data sources
                                                                              • Consumer survey data
                                                                                • Direct marketing creative
                                                                                  • Abbreviations and terms
                                                                                    • Abbreviations
                                                                                    • Appendix – The Market

                                                                                        • Figure 48: Projected enrollment* at postsecondary institutions, by control of institution, 2016-24
                                                                                        • Figure 49: Enrollment* of international students at postsecondary institutions, by country of origin, 2005 and 2015

                                                                                    Companies Covered

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                                                                                    The Financial Lives of College Students - US - January 2017

                                                                                    US $3,995.00 (Excl.Tax)