More and more college graduates are leaving education with an increasing amount of debt. This is no surprise, but how are actual students feeling about this? Unsurprisingly, according to a recent consumer report, they are certainly not happy.
Nearly 50% of those surveyed said that college was not worth the money that it had cost them. Over 40% admitted that they had to cut back on their day to day expenses because of the student debt they have as a result of college. 35% admitted that they had even had to put saving for their future or other financial goals on hold. When asked whether they would do things differently nearly half said that they wished that they had either taken far less debt on or gone without financial aid.
The students that said they wished that they had never accepted the financial aid, over 80% admitted to having missed at least one student loan repayment, and it is the stark reality of not being able to pay a bill that makes students with student debt open their eyes to their finances.
One thing that has been blamed for the student debt is the lack of education that students receive on finances and the consequences. There were only 35% of those surveyed that had attended any of the financial aid sessions that were offered in their high school. Those that did make the effort to attend the sessions, it was less than half who reported that the terms and conditions for the various financial aids and repayments options were clearly explained. There was just over 20% of students that confirmed that they had been advised with regards to management of finances and budgeting and just 15% said that their college counselor helped them to make the most of their financial aid package.
From this research, it is easy to see that the vast majority of those surveyed did not receive any information or possibly did not understand what they were being told with regards to financial aid and how they could go about making sure that they did not borrow unnecessarily. Chris Chen, a financial planner, said that he feels the actual challenge with debt is that 18 years olds do understand the weight of the loans and how they will affect their entire future. It does appear that no one is explaining the whole loan scenario properly.
One of the best ways for students to avoid this type of college debt and the regrets that it brings with it is to make sure that both the parents and children have all of the correct information issued to them, including the actual costs for them to make an informed decision. With this information, both parties are then in a position to make the right choices for them. Research has also found that just over 15% of parents had to limit their child’s choices of college purely based upon costs.
We live in a world where parents are increasingly competitive with all of the other parents, and as such their child has to attend the very best school regardless of cost, just to be better parents. It becomes more about the parents than the child as they try to outdo others. However, it is the child that will end up saddled with the student debt. For this reason, it is advisable to keep your options open as there can be cost savings in the region of $40,000 just from choosing the right educational institution.
In a recent Gallup study, there was an almost 50/50 split of students who said their education was worth the price they paid and those who thought it was not. This study is one of the largest ever conducted and covers the fundamental questions such as whether college prepares students for life in the big bad world, but boils down to whether or not they feel that college is worth it.
It should be noted that among those graduates that had student loans to fund their college education there was just over 30% that agreed that college was worth their money. It is those students that have the highest proportion of debt that appears to say that college was not worth the investment. While it seems that, for most graduates, the college question boils down to money. However, this may not be accurate. Those students that remember close relationships have a more positive attitude towards their studies.
Generally, for all of the students who are preparing to enter into college education it is important that they remember that this education is an investment and in the same way of any other investment you have to be proactive to ensure that it pays off at the end of the day.