College enrollment is projected to increase almost 9% in the United States from 2014-2022, according to a new report from Mintel.
The growing student population is more diverse than ever before with attendees no longer solidly 18-24 years old, and women projected to comprise the largest percentage in history. As attendance rises, so too does educational debt.
Student debt has climbed steadily, growing from 8% to 10% of the total consumer debt in the U.S. since the fiscal third quarter of 2011, making it greater than any type of U.S. consumer debt with the exception of mortgages.
According to Mintel data, some 30% of those who have educational loans have monthly loan payments greater than $300, while 5% have monthly payments $1,000+. College students have altered their attitudes toward financial services adjusting to residual effects of the Great Recession with over half considering debt as necessary in today’s world.
Recession Alters Attitudes
Many college students saw their parents and families hurt by the recession and as a result are much more conservative than people of older generations when it comes to their attitude about investing. In fact, 73% believe that the recent recession demonstrated how important it is to save for retirement.
Similarly, 74% of college students feel that the primary purpose of money is to purchase security. One thing that provides financial security is good credit – 71% of U.S. college students agree that having good credit is the most important factor in achieving financial success.
While 71% of college students are confident in their ability to manage their day-to-day finances, including 68% of females and 75% of males, a full 58% think credit cards can be difficult to manage.
“Unfortunately, debt is considered necessary by today’s standards, and 52% of college students agree. Many (38%) find it acceptable if it is used to buy something that is really desired. However, the negative effects the recession had on their parents and families have left college students much more conservative with their finances. To most, money means security and college is a time for students to learn how to manage it so they can begin to exert their financial independence,” said Robyn Kaiserman, Financial Services Analyst at Mintel.
Managing Financial Institutions
Despite advanced reliance on technology, college students do relatively little electronic banking beyond checking account balances and transferring money between accounts.
While over six in 10 students (64%) have downloaded their bank’s mobile app, only 18% use their smartphone to conduct more than half of their transactions. Furthermore, only 39% of those who have downloaded their bank’s app to their smartphone use it to deposit checks.
As financial institutions continue to expand their electronic services for all customers, 80% of students still feel it is important to bank with companies that have branch locations nearby.
Budgeting
“Although some college students don’t use the word ‘budget,’ they seem to keep one, even if it isn’t a formal exercise. The fact that 71% feel confident in their abilities to manage their day-to-day finances indicates that they generally stay on top of their spending even if there are a few slip-ups here and there.
Many use some type of technology to keep track of what they spend, whether it is an online function or a mobile one,” Kaiserman continued.
Overwhelmingly, both men and women age 18-23 look to their family for information about financial services (56%).
However, data shows that women also tend to rely on friends (29%), while men look to classes in school (37%) for additional information.
Men and Women
While many male college students recognize that they will have to invest in the stock market if they want to build a large retirement account, few females do – and all are skittish about the market as a result of their, and their family’s, negative experience with the recession.
Mintel data shows that males are more likely than females to have a checking or savings account in their own name at an online-only bank or have an investment account in their own name.
When it comes to saving money in the short and mid-term, males are more likely (38%) to do so in a bank or credit union every month than women (31%).
Additionally, men age 21-23 are much more likely (62%) to have a credit card in their own name as opposed to men age 18-20 (28%). Nearly 80% of men age 21-23 are confident their bank or credit union can meet all their financial needs versus men age 18-20 (54%).
Who’s Picking up the Tab
Very few college students, a mere 14%, in fact, have all their college expenses paid for by their parents or guardians.
This number rises slightly to 17% for women. This indicates that college students have some responsibility for at least a portion of their own expenses, whether immediately, in the future (if they have taken out loans), or both. Most college students (60%) – and especially women (64%) – pay for their own entertainment without help from parents or guardians.
Furthermore, 27% have either some or all responsibility for paying for their own college expenses.
Debt over the Long Haul
While student debt continues its ascension, previous generations have been facing similar long-term effects that current students fear.
According to a Mintel report, 71% of respondents age 65 and over believe they will be able to live comfortably in retirement, but that number drops to 49% among those age 55-64, who are preparing to retire in the near future.
Nearly one third (32%) of U.S. consumers age 55-64 identify payments on educational loans as a major reason for not saving more to live comfortably upon retiring.
This number increases to 40% for those age 45-54. The greatest financial concerns for current college students include making enough money to live on their own (51%), making student loan payments (33%), and managing day-to-day finances (31%).