Student Loan Market

The Student Loan Market includes Federal Loans, Private Loans, and Institutional Loans. Federal Loans: Federal loans are offered by the government and come with low interest rates and flexible repayment plans. Federal loans are the most common form of student loan which accounts for nearly 90% of the Student Loan Market revenue. In 2023, this segment was valued at USD 1,546.72 billion, and it is anticipated to reach USD 2,269.56 billion by 2032, expanding at a CAGR of 5.63%. Private Loans: Private loans are offered by banks and various other financial institutions.

These loans come with higher interest rates as well as less flexible repayment plans as compared to federal loans. These will be the lesser common form of student loans. However, the segment is anticipated to experience substantial growth over the forecast due to the increasing cost of education and optional enrollment of an increasing number of students for higher education. In 2023, the segment was valued at USD 427.23 billion, and it is anticipated to reach USD 782.37 billion by 2032, expanding at a CAGR of 7.94%. Institutional Loans: Institutional loans are offered by colleges and universities to students.

The Student Loan Market segmentation by Loan Purpose helps in understanding the market dynamics of different loan purposes. The Undergraduate Loans accounted for the largest revenue share in 2023, due to the growing number of students opt higher education across the globe. However, the Graduate Loans segment is expected to register a robust CAGR during the forecast period due to the growing demand for specific education and to develop of professionalism among the students to get better employment opportunities.

Additionally, the Professional Loans, which are designed for people interested in getting certified based on their experience, are also expected to grow. Understanding the specific needs and trends of each loan purpose helps in developing appropriate strategies and launching offers accordingly.

The repayment status segment of the Student Loan Market provides insights into the different stages of loan repayment that borrowers are in. The four main categories within this segment are 'In Repayment', 'In Deferment', 'In Forbearance', and 'In Default'. As of 2023, the majority of student loan borrowers are 'In Repayment', accounting for approximately 60% of the total market. This segment is expected to continue to grow steadily in the coming years, driven by the increasing number of students taking on student loans and the rising cost of education.

The 'In Deferment' segment refers to borrowers who have temporarily paused their loan payments due to financial hardship or other qualifying reasons. This segment is expected to remain relatively stable in the coming years, with a projected market share of around 15-18%. The 'In Forbearance' segment includes borrowers who have temporarily reduced or suspended their loan payments due to financial difficulties. This segment is expected to fluctuate depending on economic conditions, with a projected market share of around 10-12% in the coming years.

The Student Loan Market is segmented by loan term into 10-Year Term, 15-Year Term, 20-Year Term, and 25-Year Term. Among these, the 10-year Term segment accounted for the largest market share in 2023 and is projected to continue its dominance throughout the forecast period. The 15-year Term segment is expected to witness significant growth over the coming years, owing to the rising popularity of extended repayment plans among students.

The 20-year Term and 25-Year Term segments are also expected to grow at a steady pace, driven by the increasing number of students pursuing higher education and the rising cost of tuition fees. Overall, the Student Loan Market is expected to reach a value of USD 2,634.5 billion by 2030, exhibiting a CAGR of 8.2% during the forecast period (2024-2030).

The Interest Rate Type segment of the Student Loan Market is bifurcated into Fixed Rate Loans and Variable Rate Loans. Fixed Rate Loans held a larger market share in 2023, attributed to the stability and predictability of interest rates. However, Variable Rate Loans are gaining popularity due to their potential for lower interest rates, especially in a declining interest-rate environment. The Student Loan Market revenue for Fixed Rate Loans is projected to reach USD 1,345.1 billion by 2024, growing at a CAGR of 7.6%.

On the other hand, the Variable Rate Loans segment is expected to witness a higher CAGR of 8.2%, reaching a market valuation of USD 1,014.2 billion by 2024. The increasing demand for flexibility and the potential for lower interest rates are driving the growth of the Variable Rate Loans segment.