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Wednesday, July 11, 2018

Student Debt Fuels Concern and Confusion

There may be growing anxiety among many college students and their parents over whether attaining a bachelor’s degree is worth the expense, especially when student loans are involved.

Two surveys—both, ironically, commissioned by companies that provide student loans—conducted last spring with young adults reveal some of the concerns. In the survey from Ascent Student Loans, 51% of respondents said they “do not believe the value of a college education has kept up with the rising cost.” Almost half said they were responsible for paying at least 50% of their school tab.

In a survey from Discover Student Loans, 26% of current students and recent graduates were worried they’d need to take on a second job and give up leisure activities in order to pay off loan debt for their education, but that percentage rose to 59% among young adults who had been out of college for a few years.

However, a lack of financial literacy may be contributing to students’ apprehension. More than 40% of the Discover survey-takers indicated they didn’t fully understand how to budget for payments or even exactly how much they were required to pay back. In the Ascent survey, two-thirds didn’t know when loan interest begins accruing and many thought the average loan payment was less than $100 a month (Ascent said it’s more than $200).

A report on MarketWatch noted that the class of 2016 graduated with an average loan debt of $29,669, although the average was $32,596 for students whose parents had borrowed through the federal PLUS program.

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