Table of Contents
Executive Summary
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- 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
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- Total student debt nears $1.5 trillion
- Student loan delinquencies steadily on the rise
- Median household income about $40K for recent grads
Market Size
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- Total student debt nears $1.5 trillion
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- Figure 1: Total US student-loan debt, Q1 2009 - Q2 2019
- After housing, student loans are US consumers’ largest form of debt
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- Figure 2: Total US non-housing consumer debt, by type, Q1 2009 - Q2 2019
Market Breakdown
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- Student loan delinquencies steadily on the rise
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- 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
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- Figure 5: Typical family spending, average amount spent from college funding sources, 2019
- College enrollment numbers increase, but have settled around 40%
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- Figure 6: College enrollment among adults aged 18-24, 1977-2017
- FAFSA® applications amount to nearly 19 million
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- Figure 7: Total number of FAFSA® applicants, 2008-09 cycle through 2017-18 cycle
Market Factors
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- Median household income about $40K for recent grads
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- Figure 8: Median household income, by age of householder, 2017
- Consumers still think they need college to get “a good job”
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- Figure 9: Percentage who agree in necessity of college degree for “good job”, by generation, March 2019
Market Factors: Gen Z Highlight
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- A quarter of teenagers are already starting to save
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- Figure 10: Percentage of teens who are saving money for college, across demographics, March 2019
Key Players – What You Need to Know
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- 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?
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- Brands step in to help with employee degrees
- Starbucks
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- Figure 11: Starbucks Jobs tweet, September 2019
- Chipotle
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- Figure 12: Chipotle “Now serving debt-free degrees” announcement, October 2019
- Sallie Mae launches credit card for students and recent grads
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- Figure 13: Sallie Mae direct mail, September 2019
What’s Struggling?
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- Student loan debt still exists
- Rising tuition could convince students to opt out of higher education
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- 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
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- Personalized financial management for young consumers
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- 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
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- 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
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- Under 20% of US adults currently have student loan debt
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- Figure 16: Financial account ownership, October 2019
- A quarter of 18-24s have student loans to pay down
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- Figure 17: Student loan ownership, by age, October 2019
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- 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
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- Figure 19: Types of higher education funding, October 2019
- Borrowers still paying down all varieties of loans
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- 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
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- Figure 21: Total amount of outstanding educational debt, October 2019
Current Payment Behaviors
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- A third of borrowers are paying full monthly installments
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- 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
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- Figure 23: Current loan payment behaviors, October 2019
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- 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
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- Figure 25: Current loan payment behaviors, by age and household income, October 2019
Handling Student Loans
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- Students are willing to work while in school in order to pay down loans
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- Figure 26: Current student loan payment behaviors, October 2019
- Nearly 40% of borrowers receive help from their employer
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- Figure 27: Outside help in paying down loans, October 2019
- Majority of borrowers would not have been able to attend college without additional funds
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- Figure 28: Ability to pay for college, October 2019
- Over half of borrowers would consider newer or less traditional forms of funding
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- Figure 29: Willingness to try new lenders or non-traditional forms of education funding, October 2019
Parental Role in Educational Lending
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- Parents are actively involved in helping their children pay for college
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- Figure 30: Parental involvement in paying for child’s higher education, October 2019
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- Figure 31: Discover Bank direct mail to parents, May 2019
Attitudes toward Educational Lending
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- Borrowers are finding paying down their student debt to be difficult
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- 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
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- Figure 33: Parental attitudes toward cost of college, October 2019
- Consumers prefer federal loans when compared to private
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- Figure 34: Attitudes about loans to pay for higher education, October 2019
A Non-Borrower’s View of Student Loans
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- Non-borrowers are familiar with increasing student debt
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- Figure 35: Attitudes of consumers who do not have student loans, October 2019
Choosing a Private Lender
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- Recommendations rule in private lender selection
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- Figure 36: Factors in selecting private lender, October 2019
Appendix – Data Sources and Abbreviations
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- Data sources
- Consumer survey data
- Direct marketing creative
- Abbreviations and terms
- Abbreviations
- Terms
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