Classroom at a college where many borrowers from the Class of 2017 have learned.
With Memorial Day behind us and May coming to an end, college graduation ceremonies around the United States have commenced or will soon be taking place.
If they have not already, members of the Class of 2017 will exchange lecture halls and desks for office buildings and cubicles.
They will also be joining the millions of other graduates working to pay off the student debt they accumulated throughout college.
According to The Student Loan Report, there are 44,179,100 current student loan borrowers, or 70 percent of the students in the U.S. Collectively, they contribute to a national student loan debt total of $1.41 trillion. Additionally, the average student debt per borrower is an intimidating $27,857.
We wanted to find out how prepared the college graduates of 2017 were to tackle their student debt. To do this, Student Loan Report has commissioned a survey of 400 four-year college graduates from the Class of 2017 that have student loan debt.
In some areas we are pleasantly surprised, and in others we are a bit worried.
Student Loan Report's Student Debt Survey of the Class of 2017
1. After graduation, how long is the grace period on your federal student loans? In other words, how long do you have after graduation before you need to start making payments?
Only 53.75 percent of respondents could correctly identify the payment grace period on federal student loans after graduation as 6 months.
2. Do you know your monthly student loan payment after graduation? (note: within $20)
36 percent of 2017 graduates did not know their monthly student loan payment after graduation within $20.
3. Do you know your current student loan debt balance? (note:within $500)
22.75 percent of respondents did not know their current student debt balance within $500.
4. Do you plan on your parents helping you to repay your student loan debt after graduation?
24.25 percent of borrowers plan on having their parents help them repay their student loan debt after graduation.
5. Looking back, do you regret taking out the amount of student debt that you did?
54.75 percent of respondents regret taking out the amount of student debt that they did.
6. What type of interest rate is offered on your federal student loans?
43.25 percent of those polled did not know that their federal student loans had a fixed interest rate.
7. Under the Standard Repayment Plan, what is the term length on your federal student loans? In other words, in how many years is it expected to take you to repay your loans?
65.50 percent of graduates could not correctly identify the correct term length of 10 years on their federal student loans.
8. Would you say that you understand the income-driven repayment plans currently offered by the Department of Education?
40 percent of respondents said that they did not understand the income-driven repayment plans offered by the Department of Education.
9. Do you need to pay a fee to consolidate federal student loans under the Direct Consolidation Loan Program? If so, how much is the fee?
53 percent of borrowers believe there is a fee to consolidate federal student loans under the Direct Consolidation Loan Program. (Its free!)
10. Do you believe that the Department of Education will forgive all, or part of, your student loan balance?
27.50 percent of 2017 graduates believe the Department of Education will forgive all, or part of, their student loan balance. In reality, a very small percentage of borrowers will qualify for student loan forgiveness from the ED.
11. Does the Department of Education offer a federal student loan refinancing program?
61.75 percent of respondents believe the Department of Education offers a federal student loan refinancing program. They do not currently offer one.
12. Can student loans be discharged in bankruptcy?
27.75 percent of borrowers incorrectly believe their student loans can be discharged in bankruptcy.
13. Do you know the name of the company that is servicing your federal student loans?
34.25 percent of graduates do not know the name of the company that is servicing their federal student loans.
14. Do you believe there are negative consequences for either party if you make a late payment on a private student loan? (note: This question was asked to respondents with private student loan debt)
20.27 percent of borrowers did not believe there were negative consequences for the cosigner, when in reality it can damage the cosigner's credit. An additional 4.05 percent did not believe there was an impact for the borrower, only the cosigner.
First, let us start with the good statistics from this poll. It appears that many 2017 graduates are aware of their specific student loan debt situation that awaits them. Only 36 percent of the respondents could not identify their monthly student loan payment after graduation within $20. Additionally, a mere 22.75 percent of this same group did not know their current student debt balance within $500. Further, more than half of the graduates knew they had a six month grace period after graduation before they were required to start repaying their federal student loans.
Knowing how much you owe and when you owe it are the first steps in successfully managing your student loan debt. And, many of the respondents from this poll look to be on the right path.
Now, time to move onto the scarier results. First and foremost, 54.75 percent of the borrowers who participated in this poll regret taking out the amount of student debt that they did.
65.50 percent of respondents were not able to identify the correct repayment term length of 10 years on their federal student loans. This can either lead to people doing unnecessary work to get their loans repaid in less than 10 years, or people becoming too relaxed because they think they have longer than 10 years.
40 percent of 2017 graduates claimed they did not understand the income-driven repayment plans offered by the Department of Education. Helping to manage your payments according to your financial situation, Income-driven repayment plans are some of the most useful initiatives offered by the government. Failure to understand these plans can lead to student debtors making uninformed decisions with serious financial ramifications.
More than half, 53 percent, of 2017 graduates believed there is fee to consolidate federal student loans under the Direct Consolidation Loan Program. THIS IS A FREE SERVICE! Many student debtors get scammed into paying for consolidating their federal student loans, do not be one of those people.
When it came to student loan forgiveness, 27.50 percent of respondents believed the Department of Education would forgive all, or part of, their student loan balance. In reality, only a very small percentage of non-profit and government workers will qualify for the ED’s student loan forgiveness program.
A solid majority, 61.75 percent, of borrowers believe the ED offers a federal student loan refinancing program. Do not expect your student loans to be refinanced by the Department of Education, it simply will not happen.
Finally, 20.27 percent of student debtors who have a private student loan with a cosigner did not believe there were negative consequences for the cosigner. The reality is that any late payment made by a borrower will directly impact the credit of the cosigner, as he or she is acting as an equal partner in repaying the loan. A small percentage, 4.05 percent, believe the borrower was not even impacted by making a late payment on a cosigned loan.
This poll was commissioned by Student Loan Report and conducted on Pollfish, an online polling company. The poll was conducted on May 22nd, 2017. Respondents were four-year college graduates from the Class of 2017 with student loan debt. A screener question was used to ensure participants met those requirements. In total, 400 student loan borrowers were polled. Each respondent was asked to complete the questions with the utmost honesty and sincerity.
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