According to new data released by LendEDU, student borrowers who understood the risks and long term consequences of taking out student loans have been more successful in repayment compared to those who did not understand the risks of student loans.
Additionally, that same data revealed that student loan borrowers who do not blame anyone for their student debt have repaid the largest percentage of their education loans.
Over 1,300 respondents who were graduates of a four-year institution and were currently repaying their student loans were asked to pick which sentence most accurately describes them.
The first sentence was the following: “Before using student debt, I would say that I fully understood the risks and longer term consequences.”
The second sentence respondents could choose read like this: “Before using student debt, I did not understand the risks and longer term consequences.”
Average Student Loan Repayment Rates by Pre-Knowledge of Student Debt Risk
Student loan borrowers who said they did fully understand the risks of using student debt graduated college with an average debt of $40,035 and currently hold $27,741 in student loan debt. These numbers mean that student debtors who were well-informed about student loans beforehand have paid off 27.99 percent of their debt.
In comparison, student loan borrowers who did not understand the consequences of student debt graduated with an average of $39,758 in educational debt and currently hold $28,597 in debt. Further, this group of respondents have only repaid 22.84 percent of their student debt.
In short, student debtors who understood the risks of taking out student loans have repaid 5.15 percent more of their student debt than those who did not understand the consequences of going into debt for educational purposes.
There could be a couple reasons for why this polling data turned out the way that it did. First, a prospective student borrower that knew the risks and consequences of taking out student loans most likely knew that late payments on student loans can destroy their credit score. So, in fear of their credit score plummeting, well-informed student borrowers made a pointed effort to make timely payments on their student loans. The end result being that these students have repaid more of their loans compared to uninformed borrowers who missed payments because they likely assumed there were no real consequences.
The second reason could be because students who knew the risks of taking on student debt were probably better informed in terms of the options available to them. There are a number of ways student borrowers can lessen their debt burden such as having a cosigner, utilizing Income-Driven Repayment Plans, applying for grants and scholarships, refinancing their loan, and even qualifying for student loan forgiveness. Any number of these mechanisms can help a student borrower repay their loan faster, lessen their burden, or receive more favorable payment circumstances.
In previous polls conducted by LendEDU, we found that many student debtors knew very little about their options and this could greatly impair their ability to repay their loans.
In another poll that produced interesting results, student debtors were asked to choose the answer that best fit their thinking to this question: “Who do you blame for your student debt?”
Average Student Loan Repayment Rates by Accountability
Student borrowers that answered, “I do not blame anyone. Student loans are a great tool,” had repaid 29.71 percent of their student loans, the highest percentage. This group graduated school with an average of $37,850 in student debt and currently hold $24,897 in educational debt.
The group that had repaid the second highest percentage of their student loans answered, “I blame the government, why would they give me these student loans?” This group graduated college with $36,891 in student debt, and today they hold $27,637 in student debt, meaning they have repaid 26.99 percent of their debts.
Those who answered, “I blame my college, they did not inform me” had repaid 24.16 percent of their student loans, the third highest percentage This group of borrowers graduated with an average of $38,383 in student debt and currently still have $28,986 in student loan debt.
Respondents who choose the answer, “I blame myself, I should not have borrowed so much” had the fourth highest percentage, 20.48 percent, of student loans repaid. Student debtors in this group left college with $42,139 in student debt and currently hold $33,276.
Finally, the group of student loan borrowers that had the lowest percentage of student loans paid back answered, “I blame my parents, my student loans are their fault.” This group of debtors have repaid 11.79 percent of their loans, graduating with $42,139 in student loans and still holding $33,276 in educational debt.
While it is tough to draw a conclusion on behalf of all the results from this poll, one conclusion can be made about one answer in particular. Student borrowers who held themselves fully accountable for their student debt have repaid the highest percentage of their student loans. It can be a whole lot easier to repay your student loans if you spend your time working to repay those loans, rather than wasting time trying to blame someone else.
LendEDU gathered the data used in this story from an online poll conducted in April 2017 by Pollfish and commissioned by LendEDU. In total, LendEDU collected data from over 1,300 respondents. All respondents were screened to be a 4-year college graduate who is currently working to repay student debt. Student debt data was self reported by the respondents and was not verified by LendEDU. LendEDU financed this poll.
Every respondent was asked to honestly self-report the option that best represented their feelings towards their student debt. All respondents were asked to honestly self-report their student debt total at the time of their graduation. We also asked them to self-report what year they graduated college. Poll participants were also asked to self-report their current student debt total. After we gathered these four statistics for each respondent, we could calculate the percentage of student debt that each respondent paid off relative to how much time they have had to pay off their student debts post-graduation and filter it all out by what each individual chose in terms of their feelings toward student debt.
Author: Mike Brown
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