More than 40 percent of high-debt student-loan borrowers didn’t receive in-person or online counseling for U.S. government loans, even though it’s a mandatory requirement, a survey showed.
Almost 92 percent of borrowers said standardizing the format, terminology and content of aid-award letters could ease confusion, the survey also showed, according to a report released today by Young Invincibles. The Washington-based nonprofit group, which represents the interests of 18-to-34 year-olds, designed and conducted the survey with NERA Economic Consulting.
More than one in 10 borrowers defaulted on their federal loans in the first three years they are required to make payments, the Education Department said last month, intensifying concern about student debt levels. Part of the problem is that colleges are failing to inform students about the basics of the loans, including repayment terms and interest rates, said Rory O’Sullivan, co-author of the report and policy director for Young Invincibles.
“It’s pretty clear that colleges need to do more when such a high percentage of students report never receiving counseling,” O’Sullivan said in an interview. “Some counseling is of such low quality that students don’t consider it help.”
The federal government requires entrance counseling before a federal loan is disbursed and exit counseling before a student withdraws, graduates or drops below half-time attendance.
Outstanding educational loans, both private and federal, taken out by students and their parents, total more than $1 trillion, the Consumer Financial Protection Bureau said in March.
The survey respondents’ debt, at $61,484 for recent bachelor’s degree recipients and $161,000 for those who completed graduate programs within five years, is higher than average. According to The Institute for College Access & Success, the average debt for those who took out loans and graduated in 2010 was $25,250.
While 27,204 participated in the Internet survey, the results are based on a subset of 12,953 respondents. Of those, 96 percent said they received federal loans and almost one-third also had private loans. Harris Interactive Inc. (HPOL) assisted with the survey, which was carried out from Sept. 21 to 26.