What Is This Debt You Speak Of? Study Says Many Students Are Clueless About Student Loans

Student loan debt is the cause of plenty of headaches in this country, from aspiring nuns to the families of those straddled with a deceased loved one’s payments. So it’s a bit unsettling that a new study says many students are underestimating how much they owe — and some don’t even know they have debt in the first place. Shudder.

A financial literary study conducted by Iowa State University faculty and staff found that almost 40% of their students underestimated how much they owed, and one in eight didn’t even realize they had debt, reports the Des Moines Register.

The researchers surveyed 801 undergraduate Iowans in fall 2010 in the process of coming up with these shocking figures. The study also found that 10% of those underestimating their debt were off by more than $10,000. Those who didn’t take out any loans only accounted for 22% surveyed.

Researchers think the results suggest a need for additional financial counseling so students can fully understand what they’re getting themselves into, and that it will play a major role in their post-graduation lives.

To that effect, ISU will send emails to all of its students showing how much they owe, for the first time, this summer. It’ll also lay out their estimated monthly repayment upon graduation and a list of lenders, said Roberta Johnson, ISU director of student financial aid.

Another helpful tool will be an online calculator from the federal government debuting this summer, that will show students how much their majors will likely net them, salary-wise, and measures the impact of monthly student loan payments after graduation.

New study: 1 in 8 ISU students unaware of college debt [Des Moines Register]

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  1. chargernj says:

    Unaware of their college debt? And that is why I encourage my students to complete their own FAFSA and Loan applications. I know that their parents want to “help”, but they are helping their kids into a debt they aren’t even aware of.

    • ellemdee says:

      Maybe I’m the exception, but it’s shocking to me that parents are filling out forms for college students…not just helping them with them, but doing all the legwork/investigation for them. I was only 17 when I started college, but my parents didn’t have anything to do with my college education, aside from accompianying me on my initial visit to the school. I had to figure out everything on my own – where/how to buy books, getting classes approved, filling out forms, registering, etc. On the flip side, my parents did everything for my younger brother who just graduated and now he’s in his mid-twenties with no concept of responsibilities, how to handle finances, the importance of keeping up on deadlines, remember which days/times to actually go to class without being told (seriously), filling out registration/graduation forms, etc. I guess this is what happens with helicopter parenting.

      • RedOryx says:

        During my junior year, my advisor made a mistake on my audit that nobody at the college of arts and sciences noticed. About a month before graduation I got a letter from the college saying I was missing a credit and wouldn’t be able to graduate. This was like a Friday afternoon at 4pm and I had the audit signed by the college which basically allowed the unnoticed mistake to go through and I registered for the past four classes based on that piece of paper. It took several phone calls between admissions and the head of the department, but I got the missing class waived because it was their screw-up.

        About a week later I get a call from my mom: my permanent address was their house and I guess the university sent the official “Yes, you are graduating” letter to them and she was like “Huh, I had no idea you might not have graduated.”

      • Cor Aquilonis says:

        Hah. My parents were not allowed on campus while I attended school, without advance notice and being accompanied by myself. My campus, my rules. I shot that helicopter down so fast – not that it was much of a threat anyway.

    • castlecraver says:

      Not just parents, but also the colleges themselves. At my school (10 years ago), federal loans were almost the defacto payment method on the tuition bills each semester. I knew what was going on, but I’m not surprised a lot of people didn’t realize that by “pay[ing] this amount now to accept financial aid” they were obligating themselves to take out these loans. The Financial Aid office did nearly all of the dirty work and it really wasn’t as straightforward and explicit as some might think.

      It’s really become a bit like buying a car, in that the salesman wants to handle the financing for you as well, and it’s very much in his interest to make that part quick and easy. Not saying that people shouldn’t know what they’re getting into in either case, but it does sometimes seem like a conflict of interest on the part of the colleges.

    • jimbo831 says:

      I attend the University of Pittsburgh. You may or may not have heard of our recent series of endless bomb threats over the spring. Anyway, we were given minimal updates. However, one day, I received a letter addressed “To the parents of jimbo831″. This letter contained infinitely more details about the situation than we had been given via our email communications. Keep in mind I am 27, married, and have not lived with my parents since I was 17. I was quite annoyed that Pitt seems to think I am incapable of handling this myself.

      • bben says:

        This attitude at schools is nothing new. In 1979, at 31 after a divorce, I dropped out of work to go back to college. My first semester report was sent to my mother even though she was listed only as next of kin on my application as my children were too young. It took a letter to the President of the University to get them to send my grades to me – and they still insisted on sending me a copy, with the original still sent to my mother.

        • Nigerian prince looking for business partner says:

          I had the same thing happen back in the 90′s. I was a married, Army veteran, and was constantly annoyed at the mail address “To the Parents of” and all of the comments during orientation about “calling home for money”, talking to parents, etc. I found all of it very irritating.

          • Doubting thomas says:

            I ran into that as well in the mid 90′s. I was an 18 year old college student myself but was attending college on my own dime and debt. I had filled out all the forms and picked out my own school. Yet when I made the decision to blow off a class the school contacted my mother 6 states away to let her know I was failing a class.
            Then just last year when I decided to go back to school and get a real degree (non-liberal arts) I attended the transfer student orientation at my University. Now everyone here had at least one year of college already, yet at least 60% of the time was taken up by information directed at parents. If you are in your second year of college and still need mommy and daddy to pick you classes and fill out your forms there is something wrong with you and them.

        • castlecraver says:

          This may be a violation of the Family Education Rights & Privacy Act unless you specifically gave them authorization at some point to release your educational records to your parent. The US Dept of Ed has a specific office to handle FERPA complaints, and they take this sort of thing extremely seriously.

  2. FatLynn says:

    For lots of people, there are no options other than loans. As states pull more and more university funding, this will only get worse.

    • hansolo247 says:

      That and even state schools are building luxury dorms, gourmet dining, top-of-the-line gyms, and all kinds of creature comforts in. State cuts funds, schools add cost.

      When I was in school, I ate kinda OK food, had a very small dorm room in a building that was 60 years old, and worked out in a dump. Now, same school, all new stuff.

      • FatLynn says:

        Well, it’s related. Less tax money means that universities have to be far more competitive in attracting students who can fully pay their own way, so they build crap like that. The schools aren’t just doing that stuff for the heck of it.

        Costs also increase because of new technology requirements, accommodating a more diverse student body, and providing more accessibility.

        • BurtReynolds says:

          For me “competitive” meant degree programs I was interested in, respectable reputation, and PRICE.

          I mean, I could have gone to a “better” private school and been saddled with $100k in debt, but ultimately I decided there was no way the private school would be that much better than SUNY. Ultimately I still got a job and have put together a decent career so far. My private loans are paid off before the age of 30, so I really can’t complain too much.

          • Nigerian prince looking for business partner says:

            I think for a lot of kids, it’s a pretty tough choice. My nephew went through the process last year.

            He’s from Pennsylvania, so his choices were:

            1) A commonwealth school (Shippensburg, IUP, Boomsburg, etc.) for $8,000/year.
            2) A quasi-public school (Penn State, Pitt, Temple) for $16,000/year
            3) A private school for $30,000/year up.

            Pretty much all of the private schools he applied to adjusted tuition to match Pitt/PSU/Temple. It’s just crazy how expensive everything has gotten.

            I went to Pitt (eventually transferring to Penn State) many years ago and paid $7,000/year with a combination of working, GI BIll (active duty), National Guard drill pay and EAP, loans, grants, and scholarships. Even then, it was a struggle and I wound up with more loans than I was happy with.

            • AgostoBehemoth says:

              Double those figures if you need dorm space. tier 2 state school – Bloomsburg, Kutztown, Westchester – 16-17k, Penn St, 22-23K, private school, 50k. Per year.

              The problem is not the loans. The problem is the cost of the education.

      • Nigerian prince looking for business partner says:

        I’ve wondered about that too.

        When I was an undergrad (a very long time ago), I never lived in the dorms but I recall them being pretty close to what we had in the Army. The food was pretty bad, short order kind of stuff, and the dorms were tiny, with cinder block walls, no AC, two outlets, bunk beds, and group showers.

        I always assumed it was the school’s subtle way to encourage people to live off campus.

      • u1itn0w2day says:

        The college industry especially has seemed to have designed and/or structured their campuses and administrative structure similar to corporate America-YIKES. They have more or less made themselves too big fail. Perhaps they should fail on THEIR OWN without third party financial support.

    • Coffee says:

      This gradual shift in the way that the government pays for higher education – specifically the shift of funneling money through banks to the students in the form of loans instead of subsidizing education directly – is one of the more insidious developments in my generation. They’re putting a middle man there who doesn’t need to be there, and whose only motivation is to scream some delicious cream off the top before passing the actual benefit to the customer.

  3. homehome says:

    Most adults suck at it, so why would anyone expect kids to be better at it.

    • AtlantaCPA says:

      Methinks there is a connection. Perhaps the point of the article is that if we educate kids about it, they’ll be educated adults.

  4. Loias supports harsher punishments against corporations says:

    They should show the monthly loan obligation up against their likely first-year salary.

    When they start seeing that 10-20% of their salary would go toward loans, they might wake up.

    • crazydavythe1st says:

      Wake up and do what exactly? Drop out? Switch majors? Most of the majors that lead to a well-paying job aren’t ones that just anyone can do.

      10-20% of your salary is pretty much what *everyone* pays unless they choose to pay more. Anyone with a good job will end up paying 10-20% to pay it off in the recommended 10 years and because none of the income-dependent repayment plans convey them any benefit.

      If you have a bad job, you’ll end up paying 10-20% anyway and end up having your loans forgiven in 20 years.

      So why care about it?

      • BurtReynolds says:

        I see your point. You have to pay to play here, and even a “cheap” university is not anything close to affordable for the average student working squeezing in 30 hours a week with a full course load, even if they are lucky enough to have a job that pays in the double digits per hour. Chances are they don’t though.

        Explaining the leans in terms of “real world” scenarios might help some students realize just how bad it can get though. Is the $40k a year school really worth it if you can’t afford rent after graduation? Maybe you make due with a state school that is slightly less prestigious.

      • Jevia says:

        Only certain debt is forgiven in 20 years, certainly not private loan debt. That stays with you for life, until its all paid off.

        • Nigerian prince looking for business partner says:

          I’m surprised that debt is forgiven. What’s the usual term for consolidated loans — 10 or 15 years? With low rates, that seems like an incentive to stretch out payments to the longest term possible, defer them whenever possible, and get them forgiven at 20 years out.

          • pinkfish411 says:

            That doesn’t work. You only get the debt forgiven if you sign up for one of the income-based payment plans. It’s meant for people who have a lot of debt and for whatever reason never end up getting a job that allows them to pay it off.

  5. milkcake says:

    By no means a completely thought out solution but.. here’s my take on it:

    Here’s how to fix student loan problem. It’s geared towards not lending to students who are not going to make money or lend the amount that’s proportional to the amount they are going to make after the graduation.

    Basically, hold the lenders responsible for lending money propotional to the earning of the students. So if the company lends $20,000, then get 20% of the student’s salary once the student graduates for the next 10 years (or until the student pays off completely if he/she earns a lot). If the company can’t get all the money in time, then the debt is forgiven.

    There are a lot of benefits in that (and I’m talking not every single individual but the majority), first students who can’t get a job to pay up will not have debt to start with because the company will not likely lend money to history major (at least not in the order of $100K, maybe $10K?). Students who fails to get a job at least will be able to move on with their lives after 10 years. The current system doesn’t forgive student debt at all. That ruins certain people’s lives. And finally, tutition will go down for certain majors. Colleges shouldn’t charge the same amount for art majors as much as engineering majors. To keep engineers’ education up cost a lot more than art education. There’s just more supply of professors in one area over another. (Who wants to be a professor when you can make more money doing something else vs people who get PhD in history has only one viable job: Professor). So there will be cost difference accordingly. And finally, because more money is being thrown at majors that gets job, US might finally have more skilled workers that they do not have to import from foreign countries.

    • Loias supports harsher punishments against corporations says:

      Student debt is actually forgiven after 20 years. So there is a system in place.

      • Rachacha says:

        But for the average 4 year degree, the student will be approximately 42 years old. Having such a large student loan for so many years will likely keep the student out of the housing market and may also push even the most responsible person into credit card debt (after all, I already have $25,000 in student debt, what is another $1000 on the credit card)

    • TuxthePenguin says:

      I have a much easier way that would cut to the core. Student loans cannot be discharged during bankruptcy until 5 years after graduation/last class taken. Student loans are not distributed to the student anyone, but to the school (ie, they cannot send you a check, but the school could after cashing that loan check)

      Then, any of those loans discharged in bankrupcty, the school is on the hook for 50% of whatever was discharged. They benefited directly from the issuance of their loan, so they should bear some of the cost.

      • milkcake says:

        Ah that’s another great idea. The school being responsible for it as well. I really like that.

      • crazydavythe1st says:

        Federal student loans are issued to the school first. Nothing new there. The school then cuts a check for the remaining living expenses.

      • Aesha says:

        I’m the loan processor at my institution. Unless they’re taking out a personal loan, the private loan does come to the school first.

    • Jane_Gage says:

      It can be even easier, just cap what people can borrow. You can get an engineering degree from a state school, and less money available will drive down the cost of books, etc. What we have to do is dry up parasites like University of Phoenix and open enrollment “art institutes.” Or socialize public higher education, after which only independently wealthy students will attend private schools. Schools good at generating talent and wealth will have large alumni endowments, and most will have to shutter up.

  6. MattAlbie says:

    So did they just show up at college, then?

  7. incident_man says:

    What I’d like to see vis a vis higher education is a combination of things:

    1. Reduction in “administrative” staff at the higher education level, thereby reducing cost.
    2. Increase the federal income tax rate of the wealthiest 2% of wage-earners and use some of that money on higher-education costs.
    3. Increase the capital-gains tax to a reasonable level (let’s say 25% instead of the ludicrous 15% that it’s at now).
    4. Have large corporations sponsor potential employees’ education.

    Item number 4 would be similar to a contract like, “We’ll pay ‘$XXXXX’ for you getting your bachelor’s/master’s degree, in exchange for your employment for ‘Y’ years at our firm during or after your education.” The employee would get a regular salary as well, albeit reduced slightly to offset some of the education cost.

    Some employers in certain sectors of the economy have been griping about the lack of “qualified” candidates (education-wise) for quite some time, why not make them part of the solution?

    • crazydavythe1st says:

      #4 would never work.

      You have potential students from places all over the world where higher education is 100% subsidized. That’s why signing bonuses, education reimbursement, etc. are all going away – you have students that have literally zero personally invested in their education which lowers the bar for what a prospective employee is willing to accept as a salary.

      If you ask employers to completely subsidized a person’s education, they’ll just move even more work overseas.

    • George4478 says:

      To sum your plan up: Lay off librarians and secretaries. Tax people. Tax investors. Tax companies.

      Hmmmmmm. I bet I know who you’ll be voting for in November.

      • incident_man says:

        Well, now that we’re “summing things up,” why not ask those of the few, who can afford to to pay a little bit more, to do so for the benefit of the many? Or is that a bit too much to ask of those who would think nothing of ruining the lives of others for the endless pursuit of profit, above all else?

        As far as my choice in November, I’m faced with the same choice every election: cow sh*t and horse sh*t; they’re both sh*t, real question is which stinks less. Democrats and Republicans are two sides of the same coin; both controlled by corporations and the top 2%.

        Make no mistake about it, there’s no “class envy” here, just the disgust for those who have the means but refuse to help out those who are less fortunate, when the cost is so little by comparison and the potential reward to society so great.

        When John F. Kennedy took office in 1961, the top income tax rate was in excess of 70% and mega-corporations were making handsome profits, the economy was sound, families could do very well with only 1 wage-earner, the average family could afford to buy a home without going into debt for 30 years, almost all products sold here were made here (and built to last), and there was no shortage of investment in the stock market.

        Now, we have the top 2% bitching about a top tax rate roughly half of that of 1961, a vast majority of manufactured goods made overseas (mostly cheap Chinese-made junk by comparison), a majority of two-parent families having to both be employed just to make ends meet, corporations making obscene profits, workers facing stagnating or declining wages, people losing their homes, and still no shortage of investment. What’s changed?

        In short, one word: GREED. Pure, unadulterated GREED, perpetuated by the top 2% of income earners. How many zeroes have to be added on to the end of corporate profits or executive salaries before it becomes enough?

        If you’re attitude is typical of those who hold the real power in this country, the ones in control, then it’s no wonder why the United States lags behind on quality of life, quality of education, life expectancy, and quality of healthcare. I call it the “I won’t pay for anything that I don’t directly benefit from,” mentality. Except that, as part of a broader society, it’s not just YOU in that society.

        Translation: We’re all in this together, my friend; it’s best that we get past our own collective selfishness and greed to move our society forward.

        • fsnuffer says:

          “why not ask those of the few, who can afford to to pay a little bit more” – Your not asking, you are using the power of the Federal Government to take without consent. How about you go to a college you can afford, say a community college, or get a job and go to classes at night?. Or since you are about taking other peoples resources, how about the Federal Government requires you to work for them to take the out put of your work and give it to some other person so they can go to college?

          • incident_man says:

            Have you forgotten about the recent articles in the media describing numerous corporations that rake in billions, yet pay zero income taxes? Yes, that’s right….zero……zip…….nada, while the middle class busts their collective humps year after year for what little scraps are left over.

            I don’t find it irrelevant nor immoral that we ask those corporations to contribute their fair share. It’s not called theft, it’s the law, enshrined in the Constitution of the United States by the 16th Amendment.

            What’s truly immoral and arguably theft is how these corporations get away with exploiting loopholes in existing tax code to shirk their fiscal responsibilities, not to mention good corporate citizenship. This form of tax evasion is truly the only form of “trickle down” economics that has any effect on the middle class: The middle class is effectively being exploited by making up the tax difference due to the sheer virtue of not having the resources mega corporations have to evade any kind of effective taxation.

            Simply cutting spending is not the answer either; Herbert Hoover cut government spending in response to the effects of the Crash of 1929, the result plunged our country into the depths of the Great Depression. Only the economic initiatives of Roosevelt’s New Deal got the economy moving again.

            Also, let’s not forget the favourite conservative mantra: cut all “entitlement” and welfare spending. It all sounds fine and dandy on paper, but are those same folks calling for the cuts going to be so eager to give up Social Security or Medicare benefits when they become eligible, in the name of cutting spending? Are those same folks going to be willing to provide emergency services out of their own pockets…..out of the kindness of their hearts, rather than pay….out of their taxes….for the same services? Are those same folks going to be willing to build bridges, roads, water and sewer treatment plants, and other infrastructure projects for free? I don’t think so. If they want to cut welfare spending, why not cut corporate “welfare” spending; God knows corporations have enough financial resources already without the country’s tax money to boot.

            Like it or not, taxes have always been with us as a society and always will be. What has changed is the level of greed, as I alluded to before with the “I won’t pay for anything I won’t directly benefit from,” mentality that I have observed coming from the spending cuts crowd. Problem is that those who have that viewpoint can’t see past their own faces and/or lack long-term thinking, only focusing on next quarter’s earnings reports and how many zeroes they can add to those results, regardless of the impact to others.

            A civilised society exists not for the benefit of just the few with all the wealth and power, with everyone else tossed aside to fend for themselves. Rather, a civilised society exists for the benefit of ALL members of that society.

            It is truly sad that there are those of us who can’t see past their own selfishness to realise that it’s time to apply 21st century thinking to 21st century problems.

        • AcctbyDay says:

          How the current tax system is geared the top earners in the country are the only ones paying tax.
          http://ntu.org/tax-basics/who-pays-income-taxes.html The top 50% pay nearly 98% of the tax and the bottom 50% paid 2%. How can you possibly insist on more taxes for “those who can afford more” when they are the only taxpayers around? I’m not the “top 2%”, but I pay plenty of taxes and see no reason to pay more so people who already aren’t paying taxes can reap more benefits. Your points about the current economic system I agree with, but MORE TAXES is not the way to fix the economic problems, responsible spending is. Both sides are to blame for the irresponsible spending and it has to stop. You can’t borrow from Peter to pay Paul indefinitely.

    • u1itn0w2day says:

      These are issues that have to be dealt with BUT it winds up doing nothing but shifting the cost and responsibility of the student who voluntarily chose to attend a particular school. The actual cost of education needs to be reduced. The education industry has learned to exploit and abuse the someone else is paying for syndrome. Wether it’s loans, grants, scholarships,subsidies,parents etc the price of education in America is based on third party payments much like the health care industry.

      The emphasis needs to be on WHAT or HOW MUCH is being paid rather than WHO will pay.

      • incident_man says:

        Item number 1 on my list above could help alleviate the very problem you’re talking about. Is it really necessary for a university or college to have the level of administration that some of them do?

        My son’s elementary school had a novel idea: Get rid of the principal and vice-principal and have senior teachers split the responsibilities amongst themselves. Three years later and it hasn’t had any deleterious effect on the children’s education, and the district has saved close to $500,000.

        $500,000 can buy quite a few new textbooks or other desperately-needed school supplies.

      • incident_man says:

        Item number 1 on my list above could help alleviate the very problem you’re talking about. Is it really necessary for a university or college to have the level of administration that some of them do?

        My son’s elementary school had a novel idea: Get rid of the principal and vice-principal and have senior teachers split the responsibilities amongst themselves. Three years later and it hasn’t had any deleterious effect on the children’s education, and the district has saved close to $500,000.

        $500,000 can buy quite a few new textbooks or other desperately-needed school supplies.

    • TasteyCat says:

      Seems the solution to everything is to raise taxes. Eventually, the top X% will have a 158% tax rate.

  8. iesika says:

    I think there should be a mandatory “basic personal finance” class in high school. It would probably be more useful to the average kid than BritLit. A basic philosophy class focused on logic and ethics would be pretty useful, too.

    Part of the wealth gap in this country is traceable to a culture gap. If your parents don’t have a bank account and finance everything through credit cards, then who is supposed to teach you how to make smart decisions about those things? Even my fiscally-informed parents never bothered to teach me the basics until I was in my mid twenties and begging them to, because they thought I’d get it in high school or pick it up somehow by osmosis.

    Classes like that would hopefully benefit the kids and benefit society.

    • lovemypets00 - You'll need to forgive me, my social filter has cracked. says:

      Absolutely. And for those who don’t want a separate class, weave it into math class. Teach people how to keep a checkbook or savings account with debits and credits. Teach them that being able to afford something doesn’t mean you can afford the monthly payment – what happens if your income goes down or goes away? How to calculate the best deal for the money, like do I buy 1 40 oz box of something, or 2 20 oz boxes, as the bigger box isn’t always the best deal.

      You hit the nail on the head. For me, my parents taught me stuff. But I could clearly see how some of my friends and acquaintances’ parents did things, and it’s no wonder some of them turned out the way they did.

    • Kat says:

      This x 1000. There are so many people my age (mid 20′s) with absolutely no concept of personal finance. Even the basic stuff, like writing a realistic budget, seems beyond their reach. It’s hard to blame them though (the younger ones at least) when they’ve never had any financial training.

      • AtlantaCPA says:

        I still blame them. I didn’t get any ‘financial training’ – I learned by trial and error and eventually decided to learn more and go back to school for accounting and get my CPA. Point is, people need to recognize their weaknesses and address them, not wait for someone to spoon-feed them the answers. Self-sufficiency.

        I had an employee once who had the attitude of “Of course I don’t do my job well, you haven’t trained me how to do every little thing.” He’s not working for me anymore.

        • Kat says:

          But making sure a high school graduate is equipped with basic financial knowledge isn’t “spoon feeding them the answers”, and in the long run, would probably make them more self sufficient.

          We’re talking things like:

          How to determine realistic salery expectations
          Creating a budget that uses the recommended percentages (housing should only be about 35% etc..)
          Debt and how to properly deal with it
          How to grocery shop. (This one seems to hurt people the most)
          Maybe a few projects based on major life changes so they will have an idea of what the future will hold (planning a wedding, budgeting for a baby, furnishing a house)

          Congrats, you managed to learn through trial and error. It’s not impossible and eventually a large majority of these students will learn how. It isn’t better for everyone though if we equip kids with these tools from the start so they won’t be in as much debt (if any) when they leave school and will be able to get out of debt faster?

          That’s not teaching them every little thing. It’s making sure that when the go to work on that big construction site we call life, they know more than just how to hammer.

          Sorry for the cheesy metaphor.

          • Nigerian prince looking for business partner says:

            I take it you didn’t do the lesson in health class where you’re assigned a partner, and you live a simulated married life, where you pick careers, setup a budget based on your career’s salary, etc.?

          • AtlantaCPA says:

            Not trying to backpedal, but I would totally support that class for high-schoolers. I feel that once kids have reached mid-20′s they should have learned that lesson by then one way or another. If it’s in high school, that’s fine. Hopefully they start to figure it out in college, but certainly by several years after college it should have clicked by then. And if it hasn’t clicked by then, that’s when I hold them accountable and say no more excuses.

            I think we’re somewhat closer in opinion than it seemed at first. Teaching it to a high-schooler is prevention, teaching it to a 25 year old is spoon-feeding stuff they should know by now. Just my opinion :)

    • trencherman says:

      I agree. Apropos of nothing, another important class is learning how to type.

    • Jayrandom says:

      My school had this and it was mandatory. I think they worked it in with our mandatory government class. I agree that this stuff is very valuable.

      • Nigerian prince looking for business partner says:

        We had the same thing — It was integrated into home economics and health class.

  9. maxamus2 says:

    Those 1 in 8 are probably all finance majors…..

    • Difdi says:

      I have little doubt of that. After all, given how many people in the business world with computer science degrees can’t figure out how to save a document…

  10. mikesanerd says:

    My wife has lots of student loans, and I think what many people don’t grasp is that it really is that confusing. She has one or two different types of federal student loans (each with its own website and monthly payment), and her private loans are held by two or three different companies (each with its own website and monthly payment)–and the private debt gets sold to a new company every so often, just to make sure you never get the hang of it. Within each one of those websites, the debt is broken down into dozens of individual loans, each with its own principal and interest rate. I’m literally a scientist who does complex calculations for a living, and figuring out how much she owes total and what the average interest rate is is literally an all-day process for me.

    • Corinthos says:

      Thats why I was so glad mine got paid off last year. The whole new lender and website every 8 months was annoying. One of them was real annoying and made me create a password with a special character that couldn’t be at the end then after logging in then it would ask me 1 of 5 random security questions that were set up. I never use the where were you born since its where i live now and easy to guess. All the rest were favorite food, movie,musician which I would always get wrong because they change so much.

      • TasteyCat says:

        At least they didn’t use questions you don’t know the answers to. They did this to me where I work. I made up answers,. I’ll be having to speak to someone from IT if I lose my password and they ask me questions I don’t know.

  11. Blueskylaw says:

    What money? I know i’ve been driving this new car for 4 years but I actually owe
    money on it? How on earth did this happen? I thought all new cars were free?

  12. arualflower says:

    lowans? lololol

  13. az123 says:

    Part of the problem is how schools handle distributing the money as well. When I was in school many ages ago, I had some student loans, some grants and scholarships that were all handled through the university. After I filled out all the forms and submitted I would get a stack of papers back to accept this grant / scholarship and the loan paperwork. I just had to sign and send it in. The school would collect everything, total it all up, remove my tuition from that total and then deposit the remainder into my bank account.

    So unless I read through each of those papers I had no clue what percentage of the money was loans vs scholarships etc… and odds are most students probably don’t care at that time, all about how much goes into the bank. What makes it worse is that I filled out info into one university system and it processed everything for me, so if you were not diligent and responsible you would simply just have no clue.

    I also did all this myself, not with my parents help, so those who state that it is just parents it is also schools, they want the students and the money, so they make it easy for you to get it.

  14. smarmyjones goes cattywampus says:

    College is expensive. Tuition keeps going up, as does cost of living and the emphasis on getting your degree is really strong. in Iowa it’s very much the attitude of “worry about it later, focus on the degree now.” It’s not really surprising that there is confusion in exactly how much loan money they’ve borrowed.

    I’m one of the many who didn’t really know what the impact of taking all of these loans out would be. I was lucky enough to graduate in 2007 and find a job six months later. My husband, however graduated in 2008 and is currently finishing a 4 year enlistment with the Air Force because he couldn’t get a job after graduating with his engineering degree. I think both of us were always ushered into going to college with the promise of getting great jobs afterwards, even if it meant taking out a good amount of loans.

    Also Yay my Alma Mater made Consumerist. Obligatory Iowa State is way better than U of Iowa statement.

    • JF says:

      I’m curious as to why he enlisted if he has a degree (especially if it is engineering)? Why didn’t he get a commission?

      • Nigerian prince looking for business partner says:

        I imagine it’s because there’s no direct commission just for having a college degree.

        He probably enlisted as an E4 in a technical field, with the goal of going to OCS. Or, he just wanted to do his 3-years in a challenging field and get his big bonus and $25k worth of SLRP and re-join the civilian work force when the economy improves.

        • smarmyjones goes cattywampus says:

          This basically. It’s kind of a long story, but he went enlisted thinking he’d be able to make Officer right away but the military started downsizing. It’s a very fierce competition now to even get a spot in OTS, the last open board he applied for had over 900 applicants and they only took around 60. His release date is in January, so we’re just going to move on.

  15. Cooneymike says:

    Sorry, I have no pity for these students. This is a total head in the sand approach. I can grant them that it may be a little confusing, and that could justify being off a little bit, but the rest is just bunk. What is scary about this article isn’t the looming financial crisis that all these future defaulters will cause (though that is important). The problem is a generation of supposedly educated people that are this stupid and this ignorant.

    Maybe I should just give up the fight and go into a business modelled on taking advantage of people too stupid to manage their own finances like short term, high interest loans with….oh wait, that’s already taken? Nevermind.

  16. Kat says:

    I think before a student receives financial aid for the upcoming semester, he/she must sign a paper showing the loan amount for that semester and the total amount of loans thus far. It would also be nice to have a national data base where a student could enter their SSN and see a table chart that includes (for each loan) the name of the lender, amount owed, interest rate, minimum monthly payment, and a link to the lender’s website.

    • Aesha says:

      I think all schools show their aid per year and a semester breakdown. That’s just standard.

      Additionally, there is a database for just what you’re describing: the National Student Loan Data System. You can log onto NSLDS at http://www.nslds.ed.gov. A lot of students don’t realize that this is here – I didn’t until I started as a financial aid counselor.

  17. sjb says:

    College I work at has a mandatory session were the financial aid department talk about student aid, grants and scholarships. There is even a 10 question test at the end to make sure that they were listening, that if not past results in a one-on-one session with someone in financial aid to cover it again. They get learned.

    Most of these are kids were the biggest debt they ever had was $10 to a friend, they have no real comprehension of what $10,000 even feels like. Those kind of numbers are still an abstract value that only take on value after struggling to pay off a large loan. The amount of work it takes to make money in order to pay it back is what give a feeling of the value to money.

    • Aesha says:

      This is a really awesome idea – I may actually suggest this to my boss to see if she would be ok with us instituting something like this. Especially during the times in the semester when our office is fairly slow…. Our office is as clear as possible about these things, but I cringe when I find a student who has $30k in loans in a single year.

  18. Budala says:

    Unaware that they have the debt. They will graduate and will still be unaware of that. How does one hire such an idiot?

  19. Kuri says:

    And since it’s keeping a ready supply of wage slaves and making certain people a lot of money, it’s likely going to stay that way.

  20. crazydavythe1st says:

    The researchers are probably drawing the wrong conclusions from this study. And as much as Consumerist loves depicting college students as being clueless or overly entitled or whatever since they are catering to a more mature audience with very outdated perceptions of what modern college financing is really like, most of it doesn’t hold up.

    I don’t know what to say about the 1/8 that “don’t know they have debt”, but for me and many of my fellow students back in college (2 years ago) the attitude was “I don’t want to know how much I owe”.

    Before you go assuming anything negative from that consider this – what you borrow is largely fixed. Yes, for some people another job is an option. But for everyone else, if you unbelievably scrimp you can cut back on maybe $1000/semester that you would otherwise have to pay. If you have a relatively good job upon graduation (which is where many fail), that $8k is largely inconsequential in the grand scheme of things. Maybe it’s even worth it to have some small amount of creature comforts.

    There’s a good chance that these students know what they are getting into, they just don’t know the specifics of exactly how much they owe at any given time. And honestly, who can blame them? Your stories of working 10 hours per week at a Pizza Hut to pay for all of your tuition/living/health expenses are all good, but that’s not how it works nowadays.

    • lettucefactory says:

      I’m well into my 30s, but I work in higher ed, and I think you are absolutely correct. Our students know that they have loans. But they also know that they don’t have any other options to pay for their education. Dwelling on the amount of the loan won’t fix the problem. And dropping out of college to spare themselves loan debt entirely is not an option, because however onerous loans are, it’s still a better economic proposition to graduate than not graduate.

      I think an attitude of “fuck it, I’m not going to think about it too much” is a perfectly human reaction in this circumstance. I’m not saying it’s the right attitude. Students who are worried about their loans are more likely to advocate for change. And, I do think it is a problem that a lot of students just don’t have the tools to grasp the impact that their loans will have on their future. But I certainly get the instinct to not want to think about it too much. They aren’t dumb, they’re just scared.

      Also, for anybody advocating cutting administrative staff at colleges and universities – the folks in the financial aid office are administrative staff. If you’re frustrated because you’ve called the financial aid office and the person on the other end of the line is incompetent, you’ve probably been the victim of budget cuts and efforts to trim the fat. At least when it comes to state schools. It’s easy to imagine that administrative costs just consist of vice presidents sitting in their offices doing nothing, but administrative staff are the people who are on the ground providing student services every single day, too. With most employers, people seem to generally understand that you get the staff you pay for. It works that way in higher education as well.

      • AgostoBehemoth says:

        No, but you may be much better off learning a trade. Become a plumber or work in hvac, mechanic, join the air force and do jet engine repair etc.

        I tell you what, no one is ever going to outsource plumbing to India.

        before you say no way.. I say – have you SEEN your plumber’s house?

    • ARP says:

      This was the attitude I had. Student loan payments were an inevitability- it’s not like dropping out was really an option. I already had a part time job and I really didn’t think living a hermit lifestyle to save a total of $4000 over 4 years was really worth it in the grand scheme of things.

  21. Extended-Warranty says:

    See, here’s the problem. These students have NO IDEA what they are doing. Goes along quite well with how they are coming out of college with no skills. We need to quit pointing the finger, and letting this be ok.

  22. tweaked says:

    In related news, 1 in 8 undergraduate students should not have been admitted to university.

    • JoeTheDragon says:

      And jobs want university degrees for job that don’t them pass over tech schools and yet say we can’t find peopel with the right skills. Some job do need traing but university degrees are poor fit for that.

  23. trencherman says:

    I feel sorry for today’s grads. College certainly costs much more than when I went, and the job market is the pits. However, how can anyone be so oblivious to how much they will owe? Seriously? This level of ignorance scares me. I can’t quite believe it–I wonder if people are claiming ignorance when they weren’t really, just to try to get a break.

  24. Rob says:

    Obviously political majors.

  25. DontTMJudgeMe says:

    I think the “college experience” is going to change in the next generation. For example, I think students will take one or 2 classes at a time based on what they can afford and work full time to pay those bills up front. Who says everyone has to graduate in 4 years?

    In addition, I think that less high school graduates will go right off to college, if they even go at all.

    I have more student loans than I care to talk about, and I didnt want to deal with it at the time. Now that I am more mature and dealing with it, I am paying for those mistakes I made at 18.

  26. adent1066 says:

    It’s the parent’s fault. A lot of folks I know are paying their kid’s college bills fully. If the kids have no piece of the responsibility, I’m not surprised that they are so clueless about what it costs and what a sacrifice their folks are making on their behalf.

  27. u1itn0w2day says:

    The higher education industry has learned how to exploit students especially when you already have school recruiters selling a dream. There’s a reason they send you to the financial aide office AFTER you decide to attend. They want your decision based on a dream and not reality. So they sell you the dream first THEN you get to deal in all those pesky details that have MAJOR consequences that most will blow off as ‘routine’ paperwork.

    • exconsumer says:

      This is exactly it. And this is not at all unique to student loans, but all loans, and all financial transactions. We’ve developed a culture of silence about this kind of thing. Everyone involved is there to make it ‘easy’ and keep you in the dark every step of the way.

      So the system that’s put millions of dollars towards being invisible managed to fool a few college applicants. Why aren’t I surprized?

      Don’t worry though, YOU are special and immune to such tomfoolery. This can NEVER happen to you.

  28. ARP says:

    This will continue to escalate as we demand a four year degree for nearly every job (even over experience) and college is viewed as the only noble path. Until we can recalibrate those that are doing the hiring, its hard to adjust our education system. We should have a program like the UK, where after high school, you attend University or you attend a 1-2 year trade school/training program so that you have some job skills. But that means that business shouldn’t require a 4 year degree to be a janitor.

  29. chevale says:

    In pointing this out, I’m overstating the obvious, but I think many kids (not all, thank goodness) come to believe that they are exceptional, like the kids in Garrison Keillor’s Lake Woebegon, where “. . . all children are above average.” The result is kids who come into adulthood – or who become progressively older – thinking that minor details, such as acquiring massive debt, don’t really matter, because it is a given that they (these kids) are destined to become so outrageously wealthy and famous, that any baggage acquired on their way to the top will be effortlessly be cast off. They’re convinced that it’s just a matter of waiting for their ship to come in, at which point they will depart for the dock in a chauffeur-driven, paparrazi-pursued limosine. Until that time comes, they’ll just lounge on Mom & Dad’s couch, catching up on their iphone messages. I don’t know what it will take to slap them into reality.

  30. valjean260 says:

    Students enter college with very little, if no, personal finance education. It blows my mind that we require students to take fundamental math classes, but very few practical math classes. A national standard for personal finance classes in the highschool education would better position students moving into a college atmosphere where “free” money is available at every turn. (The quotes around free are intended for sarcasm)