Confidential and proprietary information © 2016 Sallie Mae Bank. All rights reserved. MAJORING IN MONEY: WORKING WITH MILLENNIALS Jenny Chandler Sallie Mae

Confidential and proprietary information © 2016 Sallie Mae Bank. All rights reserved. Who are the Millennials? –Their expectations Habits of college students –methods used to pay for purchases –their knowledge –self assessment –their money management skills Agenda

WHO ARE MILLENNIALS?

Confidential and proprietary information © 2016 Sallie Mae Bank. All rights reserved. Born: After 1980 Age of adults in 2014: 18 to 33 Share of adult population: 27% Also known as Generation Z numbering roughly 77 million, millennials make up about one-fourth of the US population (Nielsen) Note: Based on a new Pew Research Center survey conducted Feb , 2014 among 1,821 adults nationwide, including 617 Millennial adults, and analysis of other Pew Research Center surveys conducted between 1990 and 2014 Millennial Generation Source: Pew Research Center

Confidential and proprietary information © 2016 Sallie Mae Bank. All rights reserved. Millennials are the largest generation on our planet To put things into perspective: 120 million people, the population of Mexico, are going to be turning 18 every year for the next 16 years As the Baby Boomers (born between 1946 and 1964) taught us, the larger the generation, the greater the influence over norms, expectations and behavior. With the Millennials comes mega change… Millennial Generation Source: TIME 2015, pluralthinking 2015

MILLENNIALS EXPECTATIONS

Confidential and proprietary information © 2016 Sallie Mae Bank. All rights reserved. Forbes released a study about millennial consumer tendencies and compiled a list of trends that have enough momentum to be cornerstones of the industry in 2015 Some of the most well known brands are already adapting to these trends, but so are the newest brands to the market place Marketing Trends Source: Forbes article 2015

Confidential and proprietary information © 2016 Sallie Mae Bank. All rights reserved. Trend #1- Tech Immersion –Wearable tech is the new trend that did not stick with millennials right away, but as the price point becomes more “millennial friendly,” we will see young adults sporting more tech innovations on their wrists –Wearable tech will truly take off in the healthy living space where brands like Jawbone Up and Fitbit have already experienced the highest rates of success Trend #2- Mobile Payment Will Become the Norm –Millennials are the most on-the-go generation to date and are constantly seeking out ways to streamline their busy lives –Venmo, Apple Pay and Snapcash make it easy for them to transfer money while shopping and to one another –The platforms are designed to make the payment process even more efficient and remove the fees that many associate with mobile or online payment options –According to data released by Forrester, mobile payments will reach close to $90 billion by 2017 Marketing Trends Continued (Forbes)

Confidential and proprietary information © 2016 Sallie Mae Bank. All rights reserved. Trend #3- Reimagination of Social Marketing –Facebook has dominated Social Marketing since its origination, but other brands have begun finding ways to engage younger demographics –In fact, three in ten Facebookers say they have “un-liked” a brand within the last 30 days and 38 percent of year olds have done the same. This ratio is worse than Twitter and even Google+. –The faster brands are able to respond in real-time to consumers, the faster they will convert them into loyal brand partners. Marketing Trends Continued (Forbes) Source: Forbes article 2015

Confidential and proprietary information © 2016 Sallie Mae Bank. All rights reserved. Millennials indicated a trend towards the easier to use, more transparent, data-driven, and automated processes They want content that provides solutions and advice that is relevant to them They want information that can be directly applied to their specific financial situations and they are looking for it within their social networks They switch tasks quickly enough to appear to ‘multi-task’ They switch attention between media platforms 27x per hour (text, snap, etc) Primed to say it in 140 characters or less Obsolescence: trained to expect that there will be a next version How to Engage the Generation

MAJORING IN MONEY: HOW AMERICAN COLLEGE STUDENTS ARE MANAGING THEIR FINANCES EARLY INSIGHTS

Confidential and proprietary information © 2016 Sallie Mae Bank. All rights reserved. Background –Online interviews conducted by Ipsos in December 2015 –800 in school students –Enrolled Between the ages of years old –Sample reflects a cross-section of key demographic variables Survey Focus –To learn more about how students are managing their finances –To understand credit-related knowledge gaps and financial literacy needs Research Methodology

Confidential and proprietary information © 2016 Sallie Mae Bank. All rights reserved. Majority of American college students are handling their finances responsibly Students are taking advantage of a wide array of methods Their general attitudes are sensible While positive behaviors are apparent, they mask an underlying knowledge gap Students are eager for more information and resources to understand and improve their credit management Early Insights

Confidential and proprietary information © 2016 Sallie Mae Bank. All rights reserved. Today’s college students are not shying away from credit cards –56% have at least one in their wallet While carrying credit cards & debit cards, cash is king –85% use debit cards for most other purchases and payments –86% carry cash typically for in-store purchases of $20 or less –77% use a mobile payment method –17% use ATM –14% write checks How College Students Pay For Purchases

Confidential and proprietary information © 2016 Sallie Mae Bank. All rights reserved. Having a credit card doesn’t necessarily mean students are overspending –59% said reason for getting a credit card was to build a credit history When it comes to learning about money management, most college students have been home-schooled –68% said their parents influenced their decision on 1 st credit card –21% said their parents selected their first credit for them –71% said they learned how to manage money from their parents –23% learned about money management from online research –14% have consulted a financial advisor Considerations When Using Credit Cards

Confidential and proprietary information © 2016 Sallie Mae Bank. All rights reserved. Today’s college students are very focused on effectively managing their finances –59% say they never/rarely charge without dollars to pay –77% pay their bills on time –Only 4% report no practices to effectively manage their finances Students are effectively managing their payments –73% are paying their credit card bills themselves The reality is those who are carrying a credit card are using it responsibly –63% pay their credit card balance due in full each month –8% pay the minimum amount due each month Attention to Credit Health

Confidential and proprietary information © 2016 Sallie Mae Bank. All rights reserved. Credit Report Awareness

Confidential and proprietary information © 2016 Sallie Mae Bank. All rights reserved. The connection between benefits and behaviors: Most college students understand the value of good credit and the majority know how to get and maintain credit –93% know paying bills on time is a positive credit behavior –63% know keeping low credit balances is a positive credit behavior –61% know that using as much credit as possible and 61% opening multiple credit accounts at the same time are negative credit behaviors –58% know that having no credit cards is a neutral credit behavior Financial Awareness & Habits

LET’S TAKE THE CREDIT QUIZ

Confidential and proprietary information © 2016 Sallie Mae Bank. All rights reserved. College students are confident in their money management skills –65% rate themselves as excellent or good –If you rate above average, feel more confident to qualify for credit The Credit Quiz –Interest accumulation –Effect of payment on credit –Impact of repayment term Assessment: Money Management Skills

Confidential and proprietary information © 2016 Sallie Mae Bank. All rights reserved. 1. Interest accumulation question: Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow? a. More than $102 b. Exactly $102 c. Less than $102 d. Not sure Three Question Quiz

Confidential and proprietary information © 2016 Sallie Mae Bank. All rights reserved. 2. Assuming the following individuals have the same credit card with the same interest rate, which will pay the most in interest on their credit card purchases over time? a. Joe, who makes the minimum payment on his credit card bill every month b. Jane, who pays the balance on her credit card in full every month c. Joyce, who sometimes pays the minimum, sometimes pays less than the minimum, and missed one payment on her credit card bill d. All of them will pay the same amount in interest over time e. Not sure Effect of payment behavior on credit cost

Confidential and proprietary information © 2016 Sallie Mae Bank. All rights reserved. 3. Imagine that there are two options when it comes to paying back a loan and both come with the same interest rate. Provided you have the needed funds, which option would you select to minimize your total costs over the life of the loan (i.e. all of your payments combined until the loan is completely paid off)? a. Option 1 allows you to take 10 years to pay back the loan b. Option 2 allows you to take 20 years to pay back the loan c. Both options have the same out-of-pocket cost over Impact of repayment term on cost of credit

Confidential and proprietary information © 2016 Sallie Mae Bank. All rights reserved. How Much Do They Know About Credit?

Confidential and proprietary information © 2016 Sallie Mae Bank. All rights reserved. College students demonstrate careful approach Regardless skill self-rating or quiz performance - students are eager to learn more –More than 4 in 5 expressed interest in learning more about specific aspects of managing money –The topics of most interest are: 37% Strategies for saving 32% Paying for college options 32% Budgeting Money Management Education

FINANCIAL LITERACY & BEST PRACTICES DISCUSSION

Confidential and proprietary information © 2016 Sallie Mae Bank. All rights reserved. | 2727 Understanding Credit Handbook SallieMae.com/FinancialLiteracyTools

Confidential and proprietary information © 2016 Sallie Mae Bank. All rights reserved. Student Centric Education Videos SallieMae.com/FICOSallieMae.com/FICO Confidential and proprietary information © 2015 Sallie Mae Bank. All rights reserved.

Confidential and proprietary information © 2016 Sallie Mae Bank. All rights reserved. Questions?

Confidential and proprietary information © 2016 Sallie Mae Bank. All rights reserved. The information contained in this presentation is not comprehensive, is subject to constant change, and therefore should serve only as general, background information for further investigation and study related to the subject matter and the specific factual circumstances being considered of evaluated. Nothing in this presentation constitutes or is designed to constitute legal advise.