Market Trends of Student Loans Industry
High Education Costs is Driving the Market
- Student loan debt is now the second-highest consumer debt category after mortgages. The growing demand for higher education results in a continued rise in tuition and fees and other related expenses to get a college degree. For many families, footing the bill by using their savings or investments will not suffice, which is why they need to rely on student loans. The average student loan debt grew as the total debt grew, and indebted borrower numbers stayed roughly the same.
- Since the spring of last year, the average student loan debt increased by 2.74%. During that same period, the average private student loan debt decreased by 14.58%, largely due to Wells Fargo's departure from the student loan market. All postsecondary students, including those earning certificates and associate's degrees, borrow at least USD 15,000 to pay for classes.
- Australia has been recognized as one of the most expensive countries in the world for international students. From tuition fees to living expenses, studying here is costly. In the previous year, 36 out of 45 universities in Australia ranked in the QS World University Rankings. The median monthly payment among student loan holders is USD 250. University graduates owe an average of USD 33,500 a year after they leave school. The average private nonprofit university student borrows USD 33,700 to complete a bachelor's degree.
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Senior Student Loans Continue to Rise
- Crippling student debt is not exclusive to the young population. People aged 60-69 years old have as much debt as people in their 30s, averaging USD 35,637 in the previous year for the former and USD 36,406 for the latter. Senior student debt increased by a drastic 1.256% from USD 6.3 billion to USD 85.4 billion in only 13 years. According to The Consumer Financial Protection Bureau (CFPB), 73% of seniors co-signed loans for other people, usually their child or grandchild, while 27% obtained loans for their spouse or themselves.
- There are issues particular to older borrowers when it comes to repaying their student loan debt that younger borrowers might need to experience. For example, 9% of seniors delayed seeking healthcare services, while 31% had to either stop saving for retirement or use their nest eggs due to student loan debt.
- Moreover, since most student loan debt cannot be discharged in bankruptcy, some seniors suddenly found lenders garnishing part of their Social Security benefits or a portion of their tax refunds. In 2021, nearly 40% of senior borrowers were in default. With still so much debt to repay and not enough resources to utilize, more seniors might find it harder to achieve a comfortable retirement.
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