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."

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SOURCE Mintel