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Earlier this month we traveled to a few local college campuses in search of student loan borrowers. Today, 7 out of 10 graduates are leaving campus with a student loan statement in hand. And, the average graduate is leaving campus with just over $37,000 in debt.
As you might expect, it wasn’t that hard to find current student loan borrowers on campus. In fact, over the course of a few days of surveying we found 477 undergraduate and graduates students that agreed to participate in our survey. Both males and females were surveyed. Both federal and private student loan borrowers were included in our survey.
Being recent graduates ourselves, we know that college students struggle to wrap their heads around financial aid and student debt. We asked our respondents a series of questions related to their student loans and the financial aid process. Our results are startling and frankly disturbing. In only a few days we were able to conclude that current student loan borrowers know nothing about their student loans. Here are the highlights from our survey of current college students:
- 92.87 percent of students surveyed do not know the difference between subsidized and unsubsidized loans
- 97.90 percent of students surveyed do not know which loans accumulate interest in-school or during deferment
- 71.07 percent of students surveyed do not know the basic risks of a cosigner
- 75.89 percent of students surveyed with private student loans do not know the major differences between private student loans and federal student loans
- 7.90 percent of students surveyed know their current interest rates
- 6.10 percent of students surveyed know their repayment terms
- We asked students if they believe that they will be able to fully pay off their student loans borrowed:
- 11.94 percent of students surveyed “Strongly Agree”
- 29.97 percent of students surveyed “Agree”
- 20.96 percent of students surveyed “Not Sure”
- 24.11 percent of students surveyed “Disagree”
- 12.99 percent of students surveyed “Strongly Disagree”
- 85.11 percent of students surveyed rely on their parents for financial aid and student loan information
- 89.94 percent of students surveyed have heard of FAFSA
- 1.88 percent of students surveyed know what FAFSA stands for
- 75.05 percent of students surveyed know how interest rates work
- 72.95 percent of students surveyed thought Sallie Mae was a person, not a company
- 58.90 percent of students surveyed thought the total amount of outstanding student loan debt was in the millions (not billions or trillions)
- 96.02 percent of students surveyed did not know that student loan refinancing was an option after graduation
Student loans are an incredibly powerful tool when used correctly. Over 43 million Americans have student loan debt in the United States. But if the average college graduate is anything like the 477 students we talked too, boy… are tax payers in trouble.
Student loans get a bad rap these days, but maybe the borrowers are part of the problem. Yes, the rising costs of college have forced more students to use financial aid and student loans. However, it appears that student loan borrowers aren’t fully understanding their loan obligations. At LendEDU, we do our best to create awesome resources, videos, and tools to help promote financial literacy. In 2015 the LendEDU team created hundreds of original resources designed to help students and families better understand their debt.
It all starts with education. Student loan debt statistics show there is a $1.5 trillion problem and sadly the people most affected by this problem don’t even understand the problem. Once you have a good grasp on how student loans work, you should start by exploring your federal student loan options. If you still need help paying for college, you can then shop around for the best private student loans. Just be sure to know what kind of obligation you will be facing after graduation.
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Author: Dave Rathmanner
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