A new Consumer Report poll shows that 45 percent of recent college students feel their education was not worth its price. These students now struggle with underemployment, snowballing interest, and adjusting their lives to accommodate the mountain of debt looming over them. Of the 45 percent of these former students still struggling to pay off their loans:
– 38 percent didn’t graduate
– 69 percent have trouble making their payments
– 78 percent earn less than $50,000 per year
– 43 percent made financial decisions without parental input
Forbes broke the numbers down even further:
Of the 45 percent:
– 44 percent have cut back on day-to-day living expenses
– 37 percent have delayed saving for retirement or other financial goals.
– 47 percent wish they’d accepted less or no financial aid assistance and 80 percent of these men and women say they’ve missed at least one loan repayment
While people like me will be quick to slam these people for their choice of major, Forbes reports the indebted post-undergrads suffer primarily from a fundamental lack of understanding of finance and collections.
Part of the problem may be a continuing lack of prior education on financial aid and its impact. Only 38% of respondents said they attended a financial aid information session in high school, the survey found. And of those who did, less than half said the terms and conditions for each financial aid type and different repayment options were clearly explained to them.
Imagine a world in which incoming freshmen, rather than being given classes about alcohol safety and making friends, are better instructed on how to take out and repay loans. What if their advisors knew what the hell they were talking about? What if students were required to meet with financial advisors semesterly. These advisors could make sure students aren’t taking on more loans than they need to pay for frivolous things. They could ensure that students’ aid won’t dry up too quickly so more can stay in school. They could encourage students to find part-time work so they can take out fewer loans. And most of all, these advisors could clarify how the repayment process works after college, rather than cutting students loose after graduation. More financially savvy students will make for more successful alumni.
What if these students had a basic understanding of finance before they even moved in? Maybe then we’ll see the college debt bubble deflate a tiny bit. But that’s not the schools’ problem. Their priority is admitting, warehousing, and graduating students..