NEW YORK, Jan. 19, 2012 (GLOBE NEWSWIRE) -- Much has been reported about the challenging employment outlook for recent college graduates, even though most still manage to find full-time jobs. It is therefore unsurprising that a Q4 2011 survey by the Professional Risk Managers' International Association showed that 67.4% of U.S. bank risk professionals feel the level of student loan delinquencies is likely to rise in the next six months.
However, in a striking change in behavior from preceding generations of college graduates, repaying student loans appears to be a very high priority for today's consumers. According to the latest research from Cardbeat®, a syndicated research report published by the Auriemma Consulting Group, Inc. (ACG), there has been a dramatic increase in the incidence for recurring payments allocated to repaying student loans during the last few years. The incidence of consumers who say they've enrolled student loan/school tuition in a recurring payment spiked to 29% in 2011, up from a miniscule 3% who answered the same way when Cardbeat examined the same issue in 2009.
Dr. Patricia Sahm, Managing Director at ACG, says that although Sallie Mae has offered recurring payments for years, it seems that more recent marketing efforts from the giant student loan servicer appear to be yielding results. However, she adds that although there has been growth in awareness of the recurring payment option (to 56% compared to just 40% in 2009), the growth in enrollment outpaces the growth in awareness of the option. ACG's research also suggests that encouraging graduates to enroll in a recurring payment for their student loans might help mitigate risk managers' concerns about student loan delinquencies.
As a point of comparison, throughout the 1970s, the percentage of Baby Boomers who defaulted on their student loans grew at an alarming rate, prompting Congress to enact a number of new laws to control defaults. While Generation X finished college after student loan reforms were enacted, many of this "in-between" generation still avoided establishing automated repayments for their student loans.
"This says a lot about how Millennial college graduates view their student loan debt obligations and their payment priorities", said Dr. Sahm adding that "today's college graduates may view recurring payments not only as a means to build their credit records, but also as a very convenient way to do this."
About Auriemma Consulting Group
Auriemma Consulting Group (ACG) is a full-service management consulting firm serving the payments, lending, and retail industries since 1984. Cardbeat is ACG's syndicated market research study of credit cardholders, conducted monthly in the U.S. and quarterly in the U.K. ACG also conducts research in the debit and prepaid space, and publishes a quarterly report known as The Payments Report. With offices in New York and London, ACG consultants are experienced practitioners, drawn from the credit card, private label, auto finance, mortgage, and retail banking industries that we serve. For more information, please contact Dr. Patricia A. Sahm at 212-323-7000 or patricia.sahm@acg.net.
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