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The Financial Lives of College Students - US - January 2017

Published By :

Mintel

Published Date : Feb 2017

Category :

Banking

No. of Pages : N/A

College students are typically just beginning their financial journey into adulthood. Their key financial behaviors are not yet established, and they are still looking for a more traditional banking experience. It is important to realize that investing is still somewhat of a mystery to this age group, but they are actively monitoring their everyday financial account. While interested in technology, mobile banking is still not the main method of bank transactions for college students, revealing a ripe opportunity for education. These consumers are not willing to exchange their happiness for financial gain, so financial services brands have the opportunity to show how financial planning and expertise can help enhance their personal lives.

Table of Content

Overview

What you need to know
Definition

Executive Summary
The issues
Student loan debt continues to rise
Figure 1: Total student debt, Q1 2010-Q3 2016
Those under 25 are outspending their earnings
Figure 2: Average income and average expenditures, by age, 2015
Students are concerned about making enough to live on their own
Figure 3: Top two financial concerns of college students, October 2016
Portion of students do not feel appreciated by the financial services industry
Figure 4: Financial institution interest in college students, October 2016
The opportunities
There is an interest in investing
Figure 5: Interest in learning more about investing, October 2016
Students are looking for a traditional banking experience
Figure 6: Importance of having a bank branch near home, October 2016
In valuing personal time, show how savings can enhance personal experiences
Figure 7: Importance of having a lot of money, by gender, October 2016
Highlight the uniqueness of young financial customers
Figure 8: How older iGens and Millennials see themselves, February 2016
What it means

The Market - What You Need to Know
There are more than 20 million college students in the United States
Female students outnumber males
Students have borrowed an average of over $8,000
Consumers under 25 are outspending their income

Market Breakdown
Over 20 million college students in the United States
Figure 9: Projected enrollment* at postsecondary institutions, 2016-2024
More college students are full time
Figure 10: Projected enrollment* at postsecondary institutions, by attendance status, 2016-24
Female students outnumber males
Figure 11: Projected enrollment* at postsecondary institutions, by gender, 2016-24
More than half of college students are White, followed by Hispanic
Figure 12: Projected enrollment* at postsecondary institutions, by race and Hispanic origin, 2016-24

Market Factors
Outstanding student loan debt over $1.2 trillion in 2016
Figure 13: Total student debt, Q1 2010-Q3 2016
Students have borrowed an average of over $8,000
Figure 14: Role of various borrowed funding sources, 2016
College graduates earn more after graduation
Figure 15: Median annual wages for workers with high school diploma vs bachelor’s degree, Jan. 2011- Jan. 2015
Consumers under 25 are outspending their income
Figure 16: Average income and average expenditures, by age, 2015

Key Players – What You Need to Know
One third of students don’t feel appreciated by financial institutions
DOE adds new regulations to help students

What’s Working?
College students are interested in learning about investing
Acorns
Students are confident in their ability to manage their own finances
Ally’s “Splurge Alert”
Figure 17: Ally “Splurge Alert” email, April 2016
DOE adds new regulations to help students
CFPB releases safe student account scorecard

What’s Struggling?
Students are worried about making enough to live on their own
One third of students don’t feel appreciated by financial institutions
Only half of students trust the banking industry
Students not interested in nontraditional banking alternatives

What’s Next?
Student loan debt continues to rise
Should colleges adopt a fiduciary standard?
Companies offering innovative ways to pay down student debt
Future Fuel
PNC RepayReady
Volunteer to pay down loans
Snapchat looks to use its technology for robo-advising

The Consumer – What You Need to Know
Only half trust the banking industry
Most college students have a checking and/or savings account
Students understand the importance of starting early
Students are still looking for a traditional bank branch experience
Money is for security, but not at the expense of personal time or happiness
Investing is still somewhat of a mystery

Account Ownership
Most college students have a checking and/or savings account
Figure 18: Financial account ownership, October 2016
Majority of students have their own account
Figure 19: Financial account ownership, October 2016
College students more likely to have credit than prepaid
Figure 20: Financial account ownership, October 2016

Financial Behaviors
Students are actively monitoring their finances
Figure 21: Banking behaviors, monitoring finances, October 2016
Debit used more often than credit
Figure 22: Banking behaviors, debit card preference, October 2016
Mobile banking remains popular with college-aged consumers…
Figure 23: Download and use of mobile banking app, by age, June 2016
but mobile is not their main method of banking
Figure 24: Banking transactions via mobile or bank website, October 2016
More than half are able to save on a monthly basis
Figure 25: Banking behaviors, monthly savings, October 2016

What are Students Paying for?
One third of students share college expenses with parent/guardian
Figure 26: Who pays for college expenses, October 2016
Most students are paying for their own entertainment while at school
Figure 27: Who pays for entertainment expenses, October 2016
Philadelphia Federal Credit Union “Enjoy a Bite to Eat” offer
Figure 28: PCFU “Enjoy a bite on us” direct mail, August 2016

Attitudes toward Money
Money is for security, but not at the expense of personal time or happiness
Figure 29: Importance of having a lot of money, by gender, October 2016
Family is more a trusted financial source than friends
Figure 30: Importance of having a lot of money, by gender, October 2016
Most college-aged consumers not recommending financial services providers
Figure 31: Likelihood to recommend financial services provider, among 18-24s, January 2015

Attitudes toward Finances
Students understand the importance of starting early
Figure 32: Importance of starting to save early in life, October 2016
Students are confident in their ability to manage their own finances
Figure 33: Confidence in managing day-to-day finances, October 2016
Students express a preference for debit over credit
Figure 34: Using and managing debit or credit cards, October 2016
Investing is still somewhat of a mystery
Figure 35: Opinion of investing in the stock market, October 2016
Most are interested in learning more about investing
Figure 36: Interest in learning more about investing, October 2016

Where do Students Want to Bank?
Students are still looking for a traditional bank branch experience
Figure 37: Importance of having a bank branch near home, October 2016
Mixed opinions on new banking alternatives
Figure 38: Opinion on alternative banking options for ease-of-use, by gender and race, October 2016
Figure 39: Ally Bank ad, “We’re just like you”, December 2016
Trust and satisfaction levels with their personal FSI are high
Figure 40: Satisfaction with bank/credit union, October 2016
Students do not want extra correspondence from their FSI
Presence of adviser at bank/credit union is appreciated

Attitudes toward the Banking Industry
Only half trust the banking industry
Figure 41: Trust in banking industry, by gender, October 2016
One third don’t believe FSIs value college students’ business
Figure 42: Financial institution interest in college students, October 2016

What Happens After Graduation?
Making enough money is a top concern
Figure 43: Top two financial concerns of college students, October 2016
Figure 44: Top five financial concerns of college students, October 2016
Students not concerned about investing and insurance yet
Figure 45: Investment and insurance financial concerns, October 2016
More than a third already thinking about home, graduate school savings
Figure 46: Savings and loan payment financial concerns, October 2016
Figure 47: Discover student loan direct mail (statement mailing), November 2016

Appendix – Data Sources and Abbreviations
Data sources
Consumer survey data
Direct marketing creative
Abbreviations and terms
Abbreviations

Appendix – The Market
Figure 48: Projected enrollment* at postsecondary institutions, by control of institution, 2016-24
Figure 49: Enrollment* of international students at postsecondary institutions, by country of origin, 2005 and 2015

List of Table

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