Table of Contents
Overview
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- What you need to know
- Definition
Executive Summary
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- The issues
- Almost half of Millennials have student loan debt
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- Figure 1: Have outstanding student debt, by generation, July 2016
- Few understand their obligations
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- Figure 2: Understanding and repayment of loan, July 2016
- Repayment is challenging borrowers’ futures
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- Figure 3: Repayment plans, July 2016
- The opportunities
- Financial advice would help
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- Figure 4: Repayment plans, July 2016
- Credit discounts may help borrowers overcome hesitation
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- Figure 5: College loans affect credit decisions, by generation, July 2016
- Cross-selling opportunities
- What it means
The Market – What You Need to Know
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- 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
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- Total student loan debt
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- Figure 6: Total student debt, Q1 2006-Q1 2016
- Student loan default rates are higher than any other type of loan
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- Figure 7: Percentage of balance 90+ days delinquent, Q1 2006-Q1 2016
Market Breakdown
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- Auto loan growth surpasses student loan growth
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- 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
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- Figure 9: Typical family’s college funding sources, Academic year 2015-16
- Parents are paying a smaller percentage of college costs
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- 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
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- Figure 11: Federal vs. nonfederal loans, AY 2010-11 – AY 2014-15
- Other sources of funding
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- Figure 12: Role of various borrowed funding sources, 2016
Market Factors
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- A decrease in the youngest populations
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- Figure 13: Populations aged 0-24 as a percentage of the total population, 2011-21
- The cost of college continues to grow
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- Figure 14: Average college tuition and fees, 2000-01 – 2015-16
- Number of college students is increasing
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- 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
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- Figure 17: Number of students enrolled in degree-granting institutions, by gender, 2000-24
- Unemployment is going down, even among college graduates
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- Figure 18: Unemployment rate, March 1, 2012 – March 1, 2016
- Large wage discrepancy between high school and college graduates
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- 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
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- 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
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- 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?
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- Loan refinancing is growing business
- Inceptia creates online federal loan information course
- New place to lodge consumer complaints
What’s Struggling?
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- Discover pays $18.5 million fine
- Deceived students are seeking loan forgiveness
- Colleges lower tuition – But cut aid
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- Figure 22: Chose college based on size of loan, by generation, July 2016
What’s Next?
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- Amazon Prime partners with Wells Fargo
- Wealthfront offers robo-adviser for college savings
The Consumer – What You Need to Know
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- 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
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- Young women are less likely than young men to take loans
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- Figure 23: Had student loans, by gender and age, July 2016
- Millennials are most likely to have debt
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- Figure 24: Have outstanding student loan debt, by generation, July 2016
- Household income doesn’t have much effect
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- Figure 25: Have outstanding student loan debt, by household income, July 2016
- Hispanics are more likely to have student debt
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- Figure 26: Have outstanding student loan debt, by race and Hispanic origin, July 2016
- Parents of young children have more student debt than nonparents
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- Figure 27: Have outstanding student loan debt, by parental status, July 2016
Total Amount of Loan(s)
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- More have balances less than $50K
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- Figure 28: Total amount of outstanding student loans, July 2016
- Men owe more than women
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- Figure 29: Total amount of outstanding student loans, by gender, July 2016
- Older Millennials owe more
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- Figure 30: Total amount of outstanding student loans, by generation, July 2016
- Most borrow in line with their income
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- Figure 31: Total amount of outstanding student loans, by household income, July 2016
Understanding and Repayment Plans
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- Women have a better understanding than men
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- Figure 32: Understanding of loans, by gender, July 2016
- Loans are more of a hardship for women
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- Figure 33: Loan payments, by gender, July 2016
- Men are more likely to default
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- Figure 34: Loan repayment plans, by gender, July 2016
- Those with lower balances more likely to understand terms
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- Figure 35: Understanding of loan terms, by amount of loan balance, July 2016
- More with higher loan balances plan action
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- Figure 36: Loan repayment plans, by amount of loan balance, July 2016
Effect of Loans on Behavior
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- Loans affect decisions on future
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- Figure 37: Effect of loans on students’ decisions, July 2016
- Loans have more effect on men’s decisions than on women’s
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- Figure 38: Effect of loans on students’ decisions, by gender, July 2016
- Large loans affect career decisions
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- Figure 39: Effect of loans on students’ decisions, by size of loan, July 2016
Source of Information
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- Websites used more by those with smaller loans
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- Figure 40: Source of information about loans, by amount of loan, July 2016
- Men are easier to reach than women
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- Figure 41: Source of information about loans, by gender, July 2016
Experience and Attitudes toward Student Loans
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- Men are more positive
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- Figure 42: Lending attitudes/experience, by gender, July 2016
- Women need more information
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- Figure 43: Satisfaction with loan education, by gender, July 2016
- Parents are as important as students . . . and vice versa
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- Figure 44: Parents should be involved, by household income, July 2016
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- Figure 45: Discover direct mail ads, 2016
- Parents should be involved, especially when loans are large
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- Figure 46: Parents should be involved, by size of loan, July 2016
Appendix – CHAID Analysis
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- Methodology
- High earning young people are good targets for advisors
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- Figure 47: Have outstanding student loan debt – CHAID – Tree output, July 2016
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- Figure 48: Student loan debt– CHAID – Table output, July 2016
Appendix – Data Sources and Abbreviations
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- Data sources
- Consumer survey data
- Direct marketing creative
- Abbreviations and Terms
- Abbreviations
- Terms
Appendix – Market
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- Figure 49: Total US population by age, 2011, 2016, 2021
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