ERIC Number: ED470027
Record Type: RIE
Publication Date: 2001-Mar
Big Loans, Bigger Problems: A Report on the Sticker Shock of Student Loans.
King, Tracey; Frishberg, Ivan
Students frequently experience "sticker shock" when at graduation they find their college debt is much larger than they planned or expected. If they do not understand loan repayment and loan costs, they may borrow more than they can afford and experience difficulty in paying their loans. This study explored debt from the students' perspective to determine whether students clearly understood the implications of borrowing. The study also investigated students' understanding of their own student loan debt. Data came from 1,031 surveys completed by students across the United States. Among key findings was that students are not aware of the total cost of their student loans. About 78% of students underestimated the total cost of their loans, by $4,846. Larger debt comes with lower awareness of the implications of loan debt. Students in their first years of college are at greatest risk of underestimating the impact of interest on loan repayment. Students tend to overestimate their future income, and they expected to be able to contribute more of their future income to loan repayment than the loan industry recommends. Most respondents were not aware of loan repayment options. Implications for student financial aid programs are discussed. (Contains 18 figures and 19 tables.) (SLD)
Descriptors: College Graduates, Debt (Financial), Higher Education, Loan Repayment, Student Loan Programs, Student Surveys
State PIRGs, 218 D Street, SE, Washington, DC 20003 ($30). Tel: 202-546-9707; Web site: http://www.pirg.org.
Publication Type: Reports - Research
Education Level: N/A
Authoring Institution: United States Public Interest Research Group, Washington, DC.