I Owe That Much? Having Student-Loan Data Leads to Drop in Borrowing
"Study after study shows that college students are terrible at keeping track of how much debt they are racking up in school, so states are working to make the cost of higher education crystal clear—and there are signs the moves are slowing runaway borrowing," The Wall Street Journal reports
"This month, Florida joined Indiana and Nebraska in requiring that colleges and universities provide detailed information about student debt and projected loan payments.
Under a law that went into effect July 1, Florida’s institutions of higher education will now have to provide students a yearly report detailing how much they’ve borrowed so far, their expected loan total and estimated monthly payment.
The Florida law applies only to federal loans, and the disclosures will be required of all schools that disburse state financial aid. ...
A 2014 Brookings Institution report found about half of all first-year students in the U.S. 'seriously underestimate' how much debt they have, and less than one-third can estimate their debt loads within a reasonable margin of error. Many also don’t understand that their financial aid is in the form of a loan. More than one-quarter of students with federal loans reported having no federal debt and 14% said they didn’t have any student debt at all.
Another paper by economists at the Federal Reserve and Iowa State University, published in 2014 in the Journal of Student Financial Aid, found that nearly one in 10 students underestimated their total debt by more than $10,000."
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Publication Date: 7/13/2017