CHICAGO, April 17, 2014 /PRNewswire/ -- Even as the
country's total consumer debt decreased 8% from Q1 2009 to Q4 2013,
total student debt rose 63% over the same time frame, far
outstripping the growth in auto loans, the only other type of debt
that increased over that time. According to Mintel's latest report,
only 20% of respondents believe that student loans are a good
investment, which is down significantly from the 54% of respondents
who answered that same question a mere two years ago.
Data for Mintel's report Educational Lending – US, March
2014 shows that 50% of respondents to the survey had monthly
payments of $300 or less, while 30%
had payments in excess of $300,
including 5% who had payments of $1000+. By comparison, in 2012,
79% of respondents had monthly payments of $300 or less and only 21% had payments in excess
of $300. According to the 2014
report, some 26% of respondents are either considering defaulting
on their loans, have considered defaulting on their loans in the
past, or are already in default on their loans.
"College is clearly taking a huge bite out of everyone's
budgets, as the average tuition cost at both private and public
institutions continues to soar. As a result of these developments,
many young people are exploring alternative means of getting where
they want to go," says Robyn
Kaiserman, financial services analyst at Mintel. "Some
are taking a break from college, perhaps to travel or perform
community service volunteer work. Some are taking on unpaid
internships after they graduate, and some are skipping college
altogether in favor of trade schools. This may not bode well for
private institutions, as they are significantly more expensive than
public institutions, with generally more out-of-pocket investment
required."
If there is a silver lining, it would be that the perception of
student loans appears to be worse than the actual ability to pay
them back. While 65% in 2012 were finding it a hardship to pay back
their loans, that was true of only 42% in 2014. More people in 2012
(47%) than in 2014 (20%) also felt their loans would hinder their
ability to get a mortgage, though this discrepancy may also be due
in part to the change in the mortgage climate between
then—when it may have been more difficult to get a
mortgage because of the financial crisis—and now.
Should this trend of rising tuition costs continue, expensive
private colleges and universities may well suffer a decline, as
might overall college enrollment. However, the rate of increase in
tuition and fees is slowing. While the published in-state tuition
and fees at four-year public institutions rose 8.5% year over year
in 2011-12 (measured in current dollars), the rate of increase
dropped to 4.5% in 2012-13 and to 2.9%—the lowest in
30 years—in 2013-14.
"While many lenders offer loans for trade school tuition,
opportunities exist to help students finance some of the other
paths they might choose to take," concludes Robyn. "Stretching the
concept of "student" loans might mean working with young people to
finance a year of travel or community service or an unpaid
internship for a predefined amount of time. Having the opportunity
to explore viable alternative options for their success may
encourage more young people to focus on careers or opportunities
that may be better for them in the long run rather than going
straight to college for four years. This in turn may lead to less
debt—and potentially fewer defaults—than
they might otherwise have."
About Mintel
Mintel is a leading global supplier of
consumer, product and media intelligence. For more than 40 years,
Mintel has provided insight into key worldwide trends, offering
exclusive data and analysis that directly impacts client success.
With offices in Chicago,
New York, London, Sydney, Shanghai, Tokyo, India,
Malaysia, Singapore and Sao
Paulo, Mintel has forged a unique reputation as a
world-renowned business brand. For more information on Mintel,
please visit www.mintel.com.
Follow Mintel on Twitter, LinkedIn, or catch up with the latest
news, views and information from the team behind Mintel on The
Mintel Blog. You can also like Mintel on Facebook.
Logo -
http://photos.prnewswire.com/prnh/20140307/CG79328LOGO
SOURCE Mintel