Student Borrowers With Highest Debt Loads Uninformed
Some student loan borrowers with the biggest debt loads didn't fully understand what they were getting into when they borrowed the money, a survey of those borrowers has found. The survey, by the advocacy group Young Invincibles and NERA Economic Consulting, asked borrowers who signed a petition about student loan forgiveness what they were told when they took out the loans. About two-thirds of the respondents, who had an average debt load of $76,000, said they didn't understand the difference between private loans and federal loans. Federal loans have more protections and typically lower interest rates than privately offered loans. Two-thirds also said they misunderstood or were surprised by something in the borrowing and repayment process.
Twenty percent said they found the amount of their monthly payments surprising. An additional 20 percent were surprised by repayment terms, and 15 percent were surprised by the amount of interest they would have to pay. Many of those borrowers appear to look back ruefully: "I wish I asked a million more questions than what I did, but at the same time, I don’t think I knew what to ask," one said, according to the report, "High Debt, Low Information."
Borrowers with more than $50,000 in debt are a small fraction -- about 11 percent -- of student debtors over all. The average outstanding student loan debt is $23,300.