Despite a federal law requiring that colleges provide loan counseling to all recipients of student loans, a recent survey shows that over 40 percent of college students and recent college grads with substantial student loans say they received no such counseling either in-person or online, according to Bloomberg Businessweek.
Bloomberg Businessweek notes that borrowers who responded to the survey had higher debt than average (over $61,000 for recent undergraduate degree recipients, and about $161,000 for debtors who completed a graduate program within five years).
A typical newly-minted college graduate leaves campus with a diploma and a financial albatross of about $26,600, according to a recent report from the Project on Student Debt.
The survey, conducted by NERA Economic Consulting and Young Invincibles, found that students would prefer the opportunity to have individualized conversations with financial-aid officers, reports The Chronicle of Higher Education. Survey respondents identified approximate monthly payments, interest rates and repayment and consolidation options as topics they would have liked to know more about.
Also, over 90 percent of the student-loan borrowers surveyed agreed that simplifying financial aid forms and standardizing the content of aid award letters could mitigate confusion.
NERA and Young Invincibles offer a few possible explanations for the survey results, according to The Chronicle. It’s possible that some colleges are simply failing to comply with federal requirements. It’s also possible that they surveyed students failed to understand that the guidance they did receive was loan counseling, possibly because it was lousy.
Almost 60 percent of the students who participated in the survey who did recall experiencing loan counseling found it informative.
The comments in response to the article at The Chronicle, which seem likely to come from academics and administrators, generally call the survey results into question.
“You cannot borrow a federal student loan without completing a master promissory note which includes all of the information the student should be aware of before borrowing that the student is required to read and acknowledge that they understand,” says commenter troymclure, who is fairly representative. “Should we also sit them down and draw it out on a dry erase board using colorful markers? Should we act it out on a stage with a dancing FAFSA and dollar bill signs?”
According to statistics from the Department of Education, over 10% of all borrowers end up in default on their federal loans within the first three years of the repayment period, reports Bloomberg Businessweek.
Current total accumulated student loan debt, both private and federal, taken out by students and their parents, is over $1 trillion, according to a March report by the Consumer Financial Protection Bureau.
Young Invincibles is a Washington-based nonprofit group which represents the interests of 18-to-34 year-olds.