According to a new report published by Allied Market Research, titled, “Student Loan Market," The student loan market was valued at $3,933.18 billion in 2021, and is estimated to reach $8,750.75 billion by 2031, growing at a CAGR of 8.7% from 2022 to 2031.
A student loan is given to pay for the borrower's enrollment at a higher education institution or a vocational school that is secured by and on which the payment of the outstanding principal and interest has been deferred under the insurance or guarantee of the federal government, a state government, or any agency of either. In addition, rise in costs of education and increase in demand for extra educational courses along with the degree are the major factors driving the growth of the market. However, prolonged repayment periods hamper the growth of the market. Moreover, increase in initiatives by governments in developing countries on student loans to provide education to the citizens is anticipated to provide lucrative opportunities for the market growth. Thus, these are the major student loan market trends.
Furthermore, the global student loan market is witnessing growth and developing owing to various strategies adopted by the key players in the market to provide attractive offerings. For instance, in June 2022, the National Skill Development Corporation (NSDC) and Avanse Financial Services partnered together to offer quick, simple, and inexpensive financing options for the nation's youths who are interested in completing their skill requirements. With the assistance of the NSDC-affiliated institutions and a result-oriented framework that meets the needs of the sector, it enabled Avanse Financial Services to further develop an empowered workforce in India.
By end user, the graduate students segment acquired major share. This is attributed to the fact that there is an increasing number of students wanting to attend universities and complete their higher education. For several such students, borrowing huge amounts money even before they start working can be a setback, but completing higher education is a personal and professional growth for an individual.
Region wise, North America dominated the market in 2021. This is attributed to the popularity of the federal student loans among the students studying in the U.S., but they are not available to international students. Instead, international students are eligible for international student loans in the U.S. Thus, this is the major factor for the student loan market growth in the region.
The demand for education loan has increased considerably during the COVID-19 pandemic. This is attributed to the fact that many parents have seen salary reductions at their places of employment and rising education prices have made it challenging for parents to invest in their children's education. Moreover, the pandemic has increased financial strain on parents, increasing the need for financing solutions to cover tuition costs. Thus, these factors promoted the growth of the student loan industry during the pandemic situation.
KEY FINDINGS OF THE STUDY
- By type, the federal/government loan segment led the highest student loan market share, in terms of revenue in 2021.
- By repayment plan, the graduated repayment plan segment is expected to exhibit the fastest growth rate during the forecast period.
- By region, North America generated the highest revenue of student loan market size in 2021.
The key players operating in the student loan market analysis include Ascent Funding, LLC, Avanse Financial Services Ltd., Citizens Financial Group, Inc., Carvana, Chegg Inc., Earnest LLC, Edfinancial Services, LLC, Eduvanz Financing Private Limited, Google, Laurelroad, LendKey Technologies, Inc., MPOWER Financing, Prodigy Finance Limited, Quotanda, Social Finance, Inc., Wells Fargo, and ZeeFi Pty Ltd. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.