A recent study/survey of undergraduate and graduate students with high student loan debt brought to light some eye-opening facts about a significant lack of understanding when it comes to borrowing student loans. Do you feel like you fully understand the student loan process and program particulars? Do you know the differences between a federal and a private student loan? Are you aware of the repayment terms for the student loans you have borrowed? These are important questions to ask yourself. Why? My answer would be – the only way to borrow is to borrow wisely. If you have borrowed or plan to utilize student loans to finance your higher education, remember that they come with obligations. The most important (but not the only) obligation being… You must repay your student loans.
Please take a moment and look over the article about high-debt borrowers (below) from NASFAA, the National Association of Student Financial Aid Administrators, to see what sorts of things today’s borrowers fail to recognize when they take out student loans. If you’re a borrower or know you’ll be borrowing to finance your higher education sometime in the future, and you feel like you don’t fully understand student loans – contact your servicer and ask, ask, ask away! If we’re your student loan servicer (or even if we’re not your servicer), please give us a call, shoot us an email at outreach@utahsbr.edu, leave a question in our “Ask An Expert” Q&A Forum, or reach out to us on Facebook or Twitter. We’re always happy to help.
“Report Suggests More Counseling Needed for High-Debt Borrowers”
(NASFAA – National Association of Student Financial Aid Administrators) -
High-debt student loan borrowers could benefit from additional counseling, according to a recent survey performed by National Economic Research Associates (NERA) on behalf of the Young Invincibles, a national organization representing the interests of 18 to 34 year-olds.
The survey of 6,654 undergraduate and graduate student loan borrowers demonstrates an alarming lack of understanding of various aspects of student loans. The survey found that:
- About 65% misunderstood or were surprised by aspects of their student loans or the student loan process.
- About two-thirds of private loan borrowers, including those who took out both private and federal loans, said that they did not understand the major differences between their private and federal options.
- About 20% said they misunderstood or were surprised by repayment terms, 20% said they were surprised or misunderstood their monthly payments, and 15% misunderstood or were surprised by their loans’ interest rates.
The report shows that a high-debt borrowers make up a small percentage of all borrowers. Only 5.3% borrow more than $75,000. More than 72% borrowed less than $25,000 and 22.4% borrowed between $25,000 and $75,000. The report recommends several steps to help high-debt borrowers better understand student loans, including:
- providing more robust information to high-dollar borrowers with federal loans so the understand income-based repayment, deferment, and forbearance options
- increasing student loan literacy efforts for students exploring graduate options before they take out additional debt
- including better, earlier guidance in loan entrance counseling that provides borrowers with information on the effects of interest rates, definitions of terms and fees, and approximate monthly payments
- requiring loan documents to be understandable and standardized, with repayment terms and potential fees disclosed in a way that is clear for borrowers
Read the whole article from NASFAA
Again, we want to let you know that we’re happy to answer your questions and provide you with expert information about students loans and how to borrow wisely. All you have to do is give us a call, shoot us an email at outreach@utahsbr.edu, leave a question in our “Ask An Expert” Q&A Forum, or reach out to us on Facebook or Twitter.
-UHEAA Outreach
Also see, “The 1% of the Student Debt Crisis: Owing $150,000 in Loans” – http://finance.yahoo.com/news/1-student-debt-crisis-owing-163540505.html.
“When I graduated and fully did the math, I knew I was in trouble.”
Key Takeaway: It’s may not be a wise idea to wait until after graduation to see the total you owe in student loans and do the math in order to put how much you have borrowed into perspective. Compare and contrast how much you will be making or plan to make once you graduate (if you’re not sure, use average wages/salaries for your major/profession) with how much you have borrowed or plan to borrow in student loans. Know before you owe.