The entire concept made little sense to me. And yet, one of my very first actions upon arriving to college as a freshman was going to the Financial Aid Office and signing my name on loan agreements.
I was 18. My parents (who were cosigning) weren’t even there.
In that moment, I instantly gained about $8000 of debt. That was year one of five, and the loan amounts only got bigger with each passing year.
The debt problem is real
Seven out of ten college students will graduate with debt. The average 2016 college graduate had $37,172 in debt.
The question is, what’s worse:
The amount of debt students have? Or the fact that they don’t understand their debt in the first place?
According to very recent surveys, 92.87% of students don’t know the difference between subsidized and unsubsidized loans.
97.9% of students don’t know which loans accumulate interest in-school or during deferment.
75% of students don’t know the difference between private and federal loans.
Only 6% said they knew their repayment terms.
Less than 2% of students knew what FAFSA even stands for.
And not surprisingly by this point, 96% of students didn’t know student loan refinancing was an option after you graduated.
I’m going to be transparent with you. Had you asked me these questions when I was graduating from college, I would have fallen into the majority with every single one of these statistics.
I knew that what I was doing probably wasn’t good, but I had no idea just how bad it was.
And it gets worse….
You may be thinking, well, college students don’t know about these things because they rely on their parents’ knowledge.
And you would be correct. In fact, over 85% of students said they rely on their parents for financial aid and loan information. There’s just a tiny problems.