(Newswire.net — December 13, 2014) — A 28 percent of the freshmen, who have taken out federal student loans, don’t think they have any federal debt, and 14 percent don’t think they have any debt at all, according to a report authored by Beth Akers and Matt Chingos.
More and more students are taking out loans to finance college. Student debt “crisis” may be overblown, Akers and Chingos said as shockingly high debt loads are actually pretty rare. Students, however, are not fully aware how much they are really paying for their education, Akers and Chingos stated. In fact, the returns on a college investment have never been greater they said.
Nationally, less than one quarter of first-year students was able to correctly estimate their debt totals within 10 percent of the actual value.
“These results are particularly surprising given that we have limited the data to first year undergraduate students, who are unlikely to have student debt from prior years and thus should not be confused by previously accumulated debt,” Akers and Chingos write.
“Students who do not have a good idea of their level of borrowing may make expensive mistakes that they will later come to regret,” they conclude. “They are also likely to be surprised or even fearful when their first loan payments come due, which may impose an emotional burden on borrowers.”
“From experience I can testify this is true. My college debt load isn’t particularly steep, but I’ll likely be paying it off until at least my 40s,” wrote Christopher Ingraham in his blog post confirming the survey data.
“In school, student loans were just pieces of paper with numbers on them that I signed at the beginning of each semester. I didn’t give them much thought amid the chaos of registering for classes and moving into new dorm rooms and apartments. “Debt” was an abstraction to be dealt with by a future version of myself,” Ingraham explained.
Ingraham attended “a mandatory student loan education session” at the end of his senior year, which reinforces him to think of a debt as something he desperately wanted to avoid thinking about.”
“A more streamlined federal loan application process, that allows borrowers to see their current debt burden, how new loans would add to it, and how it would be paid off in the future, would certainly help things,” Ingraham concluded in his blog post.