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Description

Description

Covered in this report

Student loan debt has reached almost $1.5 trillion in the United States, and isn’t expected to decrease any time soon. 90- day delinquencies have steadily risen in the past 10 years, yet college enrollment numbers have held steady. Consumers are clearly still interested in attending colleges and universities, but the increasing price tag might make it impossible in the coming decades.

"College tuition costs are steadily rising, and the need for student loans continues. Delinquencies are on the rise as well, and borrowers are finding it more difficult to pay down their loans than they expected. Students and parents, however, are willing to make sacrifices in order to send themselves, or their sons and daughters, to college."

- Jennifer White Boehm, Associate Director - Financial Services & Automotive

This report will look at the following areas:

  • the status of education loans in the US
  • loan payment behaviors
  • attitudes toward educational lending and debt

What's included

What's included

Table of contents

Table of contents

  1. Overview

    • What you need to know
    • Executive Summary

      • Market overview
        • Top takeaways
          • There’s a continued need for educational loans
            • Both parents and students are willing to sacrifice for their education
              • Brands outside the education industry can play an active role
                • What it means/what’s next
                • The Market – What You Need to Know

                  • Total student debt nears $1.5 trillion
                    • Student loan delinquencies steadily on the rise
                      • Median household income about $40K for recent grads
                      • Market Size

                        • Total student debt nears $1.5 trillion
                          • Figure 1: Total US student-loan debt, Q1 2009 - Q2 2019
                        • After housing, student loans are US consumers’ largest form of debt
                          • Figure 2: Total US non-housing consumer debt, by type, Q1 2009 - Q2 2019
                      • Market Breakdown

                        • Student loan delinquencies steadily on the rise
                          • Figure 3: Percent of balance 90+ days delinquent, by loan type, Q1 2009-Q2 2019
                          • Figure 4: Percent of student loan balance 90+ days delinquent, Q1 2009-Q2 2019
                        • US families spent over $25,000 on college from 2018 to 2019
                          • Figure 5: Typical family spending, average amount spent from college funding sources, 2019
                        • College enrollment numbers increase, but have settled around 40%
                          • Figure 6: College enrollment among adults aged 18-24, 1977-2017
                        • FAFSA® applications amount to nearly 19 million
                          • Figure 7: Total number of FAFSA® applicants, 2008-09 cycle through 2017-18 cycle
                      • Market Factors

                        • Median household income about $40K for recent grads
                          • Figure 8: Median household income, by age of householder, 2017
                        • Consumers still think they need college to get “a good job”
                          • Figure 9: Percentage who agree in necessity of college degree for “good job”, by generation, March 2019
                      • Market Factors: Gen Z Highlight

                        • A quarter of teenagers are already starting to save
                          • Figure 10: Percentage of teens who are saving money for college, across demographics, March 2019
                      • Key Players – What You Need to Know

                        • Brands step in to help with employee degrees
                          • Rising tuition costs could convince students to opt out of higher education
                            • Personalized financial management for young consumers
                            • What’s Happening?

                              • Brands step in to help with employee degrees
                                • Starbucks
                                  • Figure 11: Starbucks Jobs tweet, September 2019
                                • Chipotle
                                  • Figure 12: Chipotle “Now serving debt-free degrees” announcement, October 2019
                                • Sallie Mae launches credit card for students and recent grads
                                  • Figure 13: Sallie Mae direct mail, September 2019
                              • What’s Struggling?

                                • Student loan debt still exists
                                  • Rising tuition could convince students to opt out of higher education
                                    • Figure 14: Average total tuition, fees, room and board rates charged for full-time undergraduate students in degree-granting institutions in current dollars, 2009-17
                                • What to Watch

                                  • Personalized financial management for young consumers
                                    • Figure 15: Generation Wealthy, as of October 2019
                                  • Results of the 2020 presidential election could drastically change higher ed financing
                                  • The Consumer – What You Need to Know

                                    • Under 20% of US adults currently have student loan debt
                                      • Federal student loans are most frequently used form of lending
                                        • A third of borrowers are paying full monthly installments
                                          • Majority of borrowers would not have been able to attend college without additional funds
                                          • Status of Educational Loans

                                            • Under 20% of US adults currently have student loan debt
                                              • Figure 16: Financial account ownership, October 2019
                                            • A quarter of 18-24s have student loans to pay down
                                              • Figure 17: Student loan ownership, by age, October 2019
                                              • Figure 18: Ally’s “Do It Right” Community – blog post on student debt, September 2019
                                            • Federal student loans are most frequently used form of lending
                                              • Figure 19: Types of higher education funding, October 2019
                                            • Borrowers still paying down all varieties of loans
                                              • Figure 20: Type of outstanding educational debt, October 2019
                                            • Educational loans will take another nine years to pay down
                                              • Nearly 20% of consumers still owe more than $20,000 in student debt
                                                • Figure 21: Total amount of outstanding educational debt, October 2019
                                            • Current Payment Behaviors

                                              • A third of borrowers are paying full monthly installments
                                                • Figure 22: Current loan payment behaviors, October 2019
                                              • Payment schedules are dictated by age, life stage
                                                • Younger borrowers more likely to defer payments
                                                  • Parents who still owe on their loans are typically following full payment schedule
                                                    • Figure 23: Current loan payment behaviors, October 2019
                                                    • Figure 24: SoFi “Save thousands on your student loans” Tweet, September 2019
                                                  • Consumers with a higher household income are more likely to pay full monthly installment
                                                    • Figure 25: Current loan payment behaviors, by age and household income, October 2019
                                                • Handling Student Loans

                                                  • Students are willing to work while in school in order to pay down loans
                                                    • Figure 26: Current student loan payment behaviors, October 2019
                                                  • Nearly 40% of borrowers receive help from their employer
                                                    • Figure 27: Outside help in paying down loans, October 2019
                                                  • Majority of borrowers would not have been able to attend college without additional funds
                                                    • Figure 28: Ability to pay for college, October 2019
                                                  • Over half of borrowers would consider newer or less traditional forms of funding
                                                    • Figure 29: Willingness to try new lenders or non-traditional forms of education funding, October 2019
                                                • Parental Role in Educational Lending

                                                  • Parents are actively involved in helping their children pay for college
                                                    • Figure 30: Parental involvement in paying for child’s higher education, October 2019
                                                    • Figure 31: Discover Bank direct mail to parents, May 2019
                                                • Attitudes toward Educational Lending

                                                  • Borrowers are finding paying down their student debt to be difficult
                                                    • Figure 32: Attitudes toward paying down debt, October 2019
                                                  • Parents are worried about the cost of higher education, and are willing to pull from their own retirement funds
                                                    • Figure 33: Parental attitudes toward cost of college, October 2019
                                                  • Consumers prefer federal loans when compared to private
                                                    • Figure 34: Attitudes about loans to pay for higher education, October 2019
                                                • A Non-Borrower’s View of Student Loans

                                                  • Non-borrowers are familiar with increasing student debt
                                                    • Figure 35: Attitudes of consumers who do not have student loans, October 2019
                                                • Choosing a Private Lender

                                                  • Recommendations rule in private lender selection
                                                    • Figure 36: Factors in selecting private lender, October 2019
                                                • Appendix – Data Sources and Abbreviations

                                                  • Data sources
                                                    • Consumer survey data
                                                      • Direct marketing creative
                                                        • Abbreviations and terms
                                                          • Abbreviations
                                                            • Terms

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