many high school seniors decide in the next couple of
months what college they will attend, most will be
flying blind about what their decision will cost them
next year or 10 years later.
all the hand wringing about runaway college costs, and
the burden of $1.2 trillion of student debt on people
trying to build a future, about half of college freshmen
donít know what theyíve borrowed. And 28 percent
with federal student loans donít even know they have
those loans, according to a study by Brookings
Institution researchers Elizabeth Akers and Matthew
study of college freshmen points to a major reason
Americans are fretting over student loans: Students are
taking on debt blindly and find out when itís too late
what theyíve done and the pressure it imposes on their
lives. About 62 percent of freshmen studied couldnít
estimate their loans.
realizing the cost of college, too many stay in college
for six years ó not realizing what two extra years
will cost them. Others start school, run up debt and
then quit before getting the degree or certificate that
will pay the bills and the student loans. Many pursue
majors that wonít end up in jobs paying salaries high
enough to cover the debt.
after leaving or finishing college, young adults may
live in fear, worrying how they will cover loans if the
job they envisioned doesnít materialize or if they end
up getting laid off. Rather than choosing the job they
really want, some will settle for less than their dream
to get a paycheck substantial enough for the loans.
students look back on their educational experiences with
some regret about the financial circumstances,"
Akers and Chingos said in a report on their study.
of thinking about how much they will owe after college
and making sure their debts will be manageable later in
life, most high school juniors and seniors focus on the
college they think they will most enjoy. A rule of thumb
suggests keeping student loan monthly payments to 8
percent of likely monthly income. Calculate monthly
payments at tinyurl.com/collegeloancalc.
about costs also misleads low- and middle-income
students when theyíre deciding on college. The College
Board found that 60 percent pass up the opportunity to
attend quality colleges they think are too expensive.
They donít realize that financial aid often makes
top-quality colleges more affordable than seemingly
cheaper choices. Savvy college shoppers, with low
incomes, donít pay sticker prices at expensive public
or private colleges. To understand what you might pay,
try an "expected family contribution"
calculator such as tinyurl.com/familycontcalc. Use the
federal formula for a sense of what youíd pay for a
public college, and "institutional" for a
an attempt to help families make wise choices about
costs, the federal government now requires colleges to
feature calculators on websites that show what each
college will cost after figuring in a familyís ability
to pay. But the net price calculators too often are
difficult to find on college websites or too complicated
to use, Akers and Chingos said.
researchers suggest it would be in the interest of
colleges to show students clearly what their costs will
be. The shock of college costs is stoking complaints
about college and making it more difficult to recruit
students as they ask, "Is college worth it?"
appears from the research that affluent parents might be
handling the college money decisions while leaving their
children in the dark. The result, according to the
researchers, can be that students finish college and are
shocked by loans they hadnít expected.
about half of freshmen attending a selective public
university could correctly identify the cost of their
education and living expenses at the end of their first
year of enrollment, the researchers said. They gave
students credit for a correct response if it was within
$5,000 of the actual cost. Half of students
underestimated how much student debt they had. And 14
percent didnít know they had any student debt even
when they did have it. Seventeen percent overestimated
what college was costing them.
seemed to be no difference in awareness based on gender,
race or income, but older students and those attending
community colleges were more aware of the costs.