Tales of students and recent graduates with high loan debts have enlivened the national discussion of college affordability. A new report on a survey of such borrowers—13,000 of them, with an average student-loan debt of $75,000—argues that confusion and a lack of guidance on making sound decisions are partly to blame for their heavy burdens.
“High-debt borrowers often do not have a clear idea about the consequences of the loans they take out, with many experiencing misunderstanding or surprise regarding repayment terms and interest rates,” says the report, by the firm NERA Economic Consulting and the youth advocacy group Young Invincibles.
The partners surveyed members of the e-mail lists of that group and another, Student Debt Crisis. Among the respondents, 42.2 percent were enrolled in an undergraduate program or had finished one in the past five years, and 57.8 percent were pursuing or had recently earned a graduate degree.
Among borrowers of federal student loans—nearly all of the respondents—only 55.3 percent said they had received loan counseling, even though colleges are required to give the borrowers they enroll both entrance and exit counseling. The report offers a few possible explanations: that some colleges weren’t complying with the requirement, for instance, and that some students didn’t identify inadequate guidance as counseling. Of the students who did remember going through such counseling, 59.3 percent found it informative.
The federal government should enforce loan-counseling requirements, the report says, and more institutions should offer the guidance in person, as opposed to online. Students would prefer to sit down with a financial-aid officer and be able to ask questions, the survey found. As for what borrowers need to know, respondents identified interest rates, repayment options and timelines, estimated monthly payments, and consolidation options, among other topics.
Students would also benefit from earlier financial-aid counseling, the report says, recommending that it be offered in high school. Simpler financial-aid forms, such as the federally standardized “shopping sheet,” would also help students, more than 90 percent of whom support the concept, according to the report.
Called “Lost Without a Map: A Survey About Students’ Experiences Navigating the Financial-Aid Process,” the report also features a word cloud of how students feel about the Fafsa, or Free Application for Federal Student Aid.