Could These Trends Take Some Load Off Student Debt Crisis?

The trend is changing

The Markets seemed to have recognized the inherent weakness in the student loan-financed pricey college education model. Let’s deliberate a little on what’s changing on this front.

Could These Trends Take Some Load Off Student Debt Crisis?

Online education

Online or Internet-based teaching programs are slowly picking up pace in the United States (SPY) (IVV) (VOO) (QQQ) (IWM). This comes on the back of convenience and cost-savings.

Currently, massive open online courses (or MOOCs) are transforming higher education in the United States. In 2015 alone, the MOOC space nearly doubled. Coursera, the largest online course provider in the world, followed by edX and Udacity added 7.0 million new students to its user base in 2015 alone. FutureLearn ended the year with a 275% rise in enrollments. FutureLearn is rapidly reaching the 3.0 million user mark. Coursera currently has about 17 million users.

Internet-based education is a cost-effective and convenient alternative to the traditional costly college education system. As it becomes more popular, we may see it taking some load off the student debt crisis.

Fintech firms

Fintech (financial technology) firms aren’t the subject of the Fed’s student loan rules. They offer crowd-funded loans at lower-than-average rates. Fintech firms make up an economic industry that uses technology to make financial services more efficient. They specialize in applying technology to the back end of established consumer and trade financial institutions.

Fintech firms play a big role in promoting technological innovations in the financial sector such as bitcoin, the cryptocurrency. A March 2015 report from Accenture indicates that the global investment in fintech has skyrocketed from $930 million in 2008 to more than $12 billion at the beginning of 2015.

As these institutions provide student loans at lower-than-average rates, they could help contain the aggregate amount of debt owed by students in the system.