- Survey of recent graduates shows that 46% say they’re suffering from “student loan regret.”
- One in four would have considered a less expensive school had they known just how difficult life would be from student loan debt.
NEW YORK — It is that time of year when graduates gleefully toss their mortarboards skyward. It is also the moment that accelerates the expiration of grace periods on student loans. Soon enough, new graduates will join the ranks of 45 million other graduates juggling student loan indebtedness while kicking off new careers.
There has been plenty of attention directed toward what some are referring to as a crisis of education-related debt. According to the Federal Reserve, student loan debt in the U.S. rose by $29 billion in the first quarter of 2019 to $149 trillion.
A study conducted by OnePoll and commissioned EDvestinU found that more than half (52 percent) of college graduates with student loan debt struggle to make payments toward those loans.
The survey of 2,000 graduates revealed that the mountains of student loan debt put many graduates on shaky financial footing, even in a robust economy. That is partly because the grace period for many student loans ends at six months, about the same amount of time it takes for the typical graduate to land a job. The result is that nearly half (47 percent) of college graduates defer student loan payment plans at least once.
“While offering affordable student loan products to students across the nation is our primary goal, encouraging responsible borrowing and borrower education is just as important.” says Rich Neilsen, Education Loan Program Manager for EDvestinU, the national nonprofit student loan program of the New Hampshire Higher Education Loan Corporation (NHHELCO), in a statement.
The survey found that about one-third of graduates miss at least one payment and about two-thirds experience stress over making payments on student loans.
Not surprisingly, about a quarter of graduates surveyed say they would have considered a less-expensive school if they had had a better understanding of the debt they would be facing post-college.
Lack of knowledge is a common theme among indebted graduates. About 80 percent of those who took out educational loans believed opportunities for student loans were limited. The truth is that about half of students entering college should have done their first research paper on how to apply for student loans.
“Paying for college is a significant investment for most families,” Neilsen remarks. “It’s essential borrowers properly educate themselves about the differences between lenders and the products that they offer so that they can ensure they are making the best borrowing decision for their particular situation.”
Lack of information at the front-end combined with stressful payment demands post-college means 46 percent of graduates carrying student loan debt suffer from student loan regret. It’s a problem that reaches far beyond the first few years out of college. For graduates who are ages 46 and older, 72 percent are still stressing about making monthly payments toward student loans and 55 percent have missed at least one payment.
The survey also found that 58 percent of students who enter college do not know about options that are available to refinance their loans. Of current borrowers, 29 percent are unaware of alternatives to help them reach their goal of making monthly loan payments.
Almost two-thirds (63 percent) of graduates with student loan debt have never tried to refinance loans, but for the 37 percent who have refinanced, the results have spelled relief.
One of the survey participants said the refinancing experience was “excellent, reliable, and very useful.” Another respondent said, “For my undergraduate loans, it was extremely easy. I just went online and filled out a form, and it was all taken care of for me.”
With all the potential long-term stress involved in student loan debt, it is important to start researching early on and look into options available post-graduation, including student loan refinancing, federal student loan consolidation, income-driven repayment plans and student loan forgiveness.
“Minimizing the stress student loan repayment may cause can be addressed much easier through proper research and educated decision-making when borrowing,” Neilsen advises. “But for those student loan borrowers already in repayment, refinancing is a viable option that may lead to lower interest rates and monthly payments, thereby lowering the total overall cost of borrowing.”
It turns out that financing an education is an education in itself.