Author: Mintel Group Ltd.
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Educational Lending - US - March 2014
Scope and Themes
 
What you need to know 
It is being widely reported that the student loan situation is a crisis that is reminiscent of the mortgage crisis. Large numbers of unsecured loans are being handed out – in many cases to people who may never be able to repay them. Roughly 25% of respondents to Mintel’s survey for this report are either in default, actively considering default, or have considered default in the past, and more than 40% consider their monthly loan payments to be a financial hardship. Perhaps more importantly, about 20% of respondents believe that their student loan payments will get in the way of them applying for a credit card or a mortgage, which may further dampen the sluggish economic recovery.

At the same time the industry struggles with defaults and the government works to pass legislation that will help the situation, enrolling in college is losing a bit of its luster. While 54% of respondents to the survey for Mintel’s previous report Education Lending – US, April 2012 felt that taking out a student loan was a good investment, that number dropped to 20% of the survey respondents for this report. An additional challenge in the marketplace is the declining numbers in younger age groups as America’s population ages and the college-aged cohort is not completely being replaced. There was also a slight decline in both graduate and undergraduate enrollment from 2011 to 2012, and, while it is not yet clear whether this decline is the beginning of a trend or merely another temporary dip, it bears watching. 

This report builds on the analysis presented in Mintel’s Education Lending – US, April 2012. 

Data sources
Consumer survey data
For the purposes of this report, Mintel commissioned exclusive consumer research through GMI to explore consumer consumption of/attitudes and behaviors toward educational lending. Mintel was responsible for the survey design, data analysis, and reporting. Fieldwork was conducted in January 2014 among a sample of 2,217 adults aged 18+ with access to the internet.

Mintel selects survey respondents so that they are proportionally balanced to the entire US adult population based on the key demographics of gender, age, household income, and region. Mintel also slightly oversamples, relative to the population, respondents that are Hispanic or Black to ensure an adequate representation of these groups in our survey results. Please note that our surveys are conducted online and in English only. Hispanics who are not online and/or do not speak English are not included in our survey results.

While race and Hispanic origin are separate demographic characteristics, Mintel often compares them to each other. Please note that the responses for race (White, Black, Asian, Native American, or other race) will overlap those that also are Hispanic, because Hispanics can be of any race.

Direct marketing creative
All estimated mail volume data and consumer direct mail marketing creatives are provided by Mintel Comperemedia. 

Mintel Comperemedia is a searchable competitive database tracking direct mail, print, and online advertising in the US and Canada, as well as email in the US. Comperemedia tracks information across eight sectors: Banking, Credit Card, Investments, Insurance, Mortgage and Loan, Telecom, Travel and Leisure, and Automotive.

For more information, please contact Account Services Management at 312.450.6353 or www.mintel.com.

Abbreviations and terms
Abbreviations
The following is a list of abbreviations used in this report: 

CFPB | Consumer Financial Protection Bureau
DOE | Department of Education
FDIC | (Federal Deposit Insurance Corporation)
FFELP | Federal Family Education Loan Program
FY | Fiscal year
NCUA | National Credit Union Administration
PSL | Private student loan

Terms
Pell Grants | A federal need-based grant for low-income undergraduate and certain postbaccalaureate students to promote access to postsecondary education
Parent PLUS Loans | A federally guaranteed loan that parents of dependent undergraduate students can use to help pay education expenses
Grad PLUS Loans | A federally guaranteed loan that can be used to cover the full costs of graduate school, including reasonable living costs.
Published tuition and fees | Tuition and fees published by a college or university before all financial aid is applied.
Net tuition and fees | What a student pays in tuition and fees after all financial aid is applied.

Federal Stafford Loans

Low-interest loans for eligible students to help cover the cost of higher education at a four-year college or university, community college, or trade, career, or technical school. Eligible students borrow directly from the US Department of Education at participating schools. There are two types:

Direct Subsidized Loans – Direct Subsidized Loans are for students with financial need. The school reviews the results of the student’s Free Application for Federal Student Aid (FAFSA) and determines the amount the student can borrow. The student is not charged interest while in school at least half-time and during grace periods and deferment periods.
Direct Unsubsidized Loans – Students are not required to demonstrate financial need to receive a Direct Unsubsidized Loan. Like subsidized loans, the school determines the amount the student can borrow. Interest accrues on an unsubsidized loan from the time it’s first paid out. The student can pay the interest while still in school and during grace periods and deferment or forbearance periods, or allow it to accrue and be capitalized into the principal amount of the loan.

Perkins Loans | The Federal Perkins Loan Program provides low-interest loans to help needy students finance the costs of postsecondary education. Students attending any one of approximately 1,700 participating postsecondary institutions can obtain Perkins loans from the school.

Generations
Generations are discussed within this report, and they are defined as: 

World War II | The generation born in 1932 or before. In 2014, members of this generation are aged 82 or older.
Swing Generation | The generation born between 1933 and 1945. In 2014, members of the Swing Generation are between the ages of 69 and 81.
Baby Boomers | The generation born between 1946 and 1964. In 2014, Baby Boomers are between the ages of 50 and 68.
Generation X | The generation born between 1965 and 1976. In 2013, Generation Xers are between the ages of 38 and 49.
iGen/Millennials* | The generation born between 1977 and 1994. In 2014, Millennials are between the ages of 18 and 37.

* includes the oldest members of the iGeneration, aged 18-19

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