A Ton of People Don't Understand Their Own Student Loans
On the same day that we learn that student loan debt in America has passed the $1 trillion mark—meaning that student debt is even worse than we thought just weeks ago—it's reassuring to also learn that this massive, shaky bubble is perched on a firm foundation of complete financial ignorance.
Now there is more evidence than "overwhelming common sense" to show that handing tens of thousands of dollars worth of loans to unsophisticated teenagers may not be a completely fair strategy, for lenders. A new survey shows that a lot of people carrying huge student loan burdens were only vaguely aware of what the hell they were getting into:
About 65 percent misunderstood or were surprised by aspects of their student loans or the student loan process.
About two-thirds of private loan borrowers, including those who took out both private and federal loans, said that they did not understand the major differences between their private and federal options.
This survey, by NERA Economic Consulting, focused on the highest-debt borrowers. For a kid with $100K in loans not to know the difference between private and public loans is somewhat alarming. Also, about 20% said they were surprised by the terms of their repayment. Yikes.
