NEW YORK (MainStreet) Two years ago, more than half of Americans believed student loans were a good investment. Today not so much. Just 20% believe financing an education is a good idea. And, according to a new Mintel survey on educational lending, 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.
However, there is some good news: fewer consumers are saying that paying back student loans is a hardship. Nearly two-thirds (65%) of Americans said that was the case in 2012, today 42% say repaying student loans is a hardship.
"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," says Robyn Kaiserman, financial services analyst at Mintel. "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."
Americans trimmed consumer debt by 8% since the beginning of 2009, but student loan debt rose 63% over the same period. The report reveals that half of survey respondents had monthly payments of $300 or less, while 30% had payments greater than $300 -- 5% had payments exceeding $1000 per month. "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," Kaiserman says. "As a result of these developments, many young people are exploring alternative means of getting where they want to go. 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. "