A survey of students conducted by Federal Student Aid (FSA) shows a significant percentage of borrowers said they knew little to nothing about student loans at the time they started college.
The survey was presented during a session at the FSA Training Conference in Atlanta this week. Among other things, the survey results showed more than half of borrowers currently in school (52.3 percent) said they knew nothing or very little about loans. That percentage only increased for other groups. Borrowers in their grace period who said they knew little to nothing came in at 53 percent. And among delinquent borrowers and those in default, 71.8 percent and 72.8 percent respectively said they knew little to nothing about loans when they started college.
A perhaps more striking statistic, the survey found 27 percent of delinquent borrowers and nearly one-third of borrowers in default (31.7 percent) said they knew nothing at all about loans when they began school.
It's alarming that more than one-quarter of #studentloan borrowers who have delinquent or defaulted loans say they had no knowledge about borrowing when they started college. #FSATC2018 pic.twitter.com/WU3wdqjjDN— Diane Cheng (@dcheng20) November 29, 2018
ED officials noted a few limitations of the survey: students were asked to self-assess their knowledge of student loans, and the survey had just a 4 percent response rate.
A survey of borrowers who are currently in, or have just completed, their grace period found that 44 percent of borrowers overestimated their current debt by 10 percent or more, and 15 percent underestimated by 10 percent or more.
More than half of in-grace borrowers said they ended up borrowing more—or a lot more—than they initially anticipated. Not surprising, but nearly half of those in default or delinquent said they borrowed "a lot more." #FSATC2018 pic.twitter.com/1mWyASBAjJ— Allie Bidwell (@alliebidwell) November 29, 2018
Many borrowers also said they ended up borrowing more than they initially anticipated when they began school. Nearly half of those in default or delinquent on their student loans said they borrowed “a lot more” than they initially thought, and nearly one-third of in-grace borrowers said the same.
The vast majority of borrowers in default or delinquent on their loans said they would take different actions if given the change, while a small percentage (4 percent and 7 percent respectively) said they would make no changes. About one-third of in-grace borrowers said they would make no change, and 37 percent said they would make some change.
Publication Date: 11/30/2018