Report: Nearly Half Of College Students Don’t Know How Much Their Tuition Costs, If They Have Student Debt

Over the past year we’ve read a number of reports that shone a light on just how prevalent student loans are: nearly 40 million consumer have taken out at least one loan to pay for their education. Now a new report takes a look at just how much students actually understand about the cost of their education and student debt. And, as we all probably should have expected, the findings aren’t exactly pleasant.

A new report [PDF] from the Brookings Institute, “Are College Students Borrowing Blindly,” found that most student are generally clueless about the cost of their education and how they are paying for it.

The report, which is based on student survey responses and administrative records on cost and borrowing, found that just 52% of college students could correctly identify what they paid for their first year of college.

While the figure isn’t great to begin with, when you consider that the report describes “correctly identified” amounts as those within $5,000 of their actual tuition, you might begin to see why lawmakers have been pushing for bills that would add transparency to student loans.

Of the remaining respondents 25% underestimated their tuition costs, 17% overestimated and 7% had no idea what they are paying for a degree.

Perhaps the most gut-wrenching statistic compiled by the Brookings Institute came in the form of just how little students actually understand about student loan debt.

While we know that the student loan debt tab is well over one trillion dollars and that most students have debt, the students themselves seem quite oblivious to the fact that they owe thousands of dollars to the government.

When asked if they carried any student loan debt, 28% of first-year students who had taken out federal loans reported they had no federal debt and 14% said they didn’t have any student debt at all.

Students’ lack of knowledge during their first year of college regarding their student debt sets the stage for a rude awakening when it comes time to repay their loans, the Brookings Institute reports.

“Students who do not have a good idea of their level of borrowing are likely to be surprised or even fearful when their first loan payments come due, which may impose an emotional burden on borrowers,” the report authors state. “More broadly, it may perpetuate popular narratives about crushing student loan burdens, which could discourage promising students from pursuing a college education.”

Are College Students Borrowing Blindly? [Brookings Institute]

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.