Student Loan Borrowers Don’t Know What They’re In For

Career College Central summary:

  • Student loans from the federal government are generally easy to get. With the exception of PLUS loans, which are co-signed by parents or guardians, credit scores are not checked, because most borrowers are assumed to be just out of high school. Employment histories aren't checked for the same reason.
  • So the New York Fed added some questions on the topic to its Survey of Consumer Expectations last July that were directed to heads of households as opposed to the students — referred to as "the child" — who got the loans. The result? The respondents, the report concluded didn't know what they were in for. For example, 1,029 respondents were asked:
  • If a borrower is unable to repay her federal student loan, what steps can the government take to collect the debt?

    • A. Report that the student debt is past due to the credit bureaus.
    • B. Garnish wages until the debt, plus any interest fees, is repaid.
    • C. Retain tax refunds and Social Security payments until the debt, plus any interest and fees, is repaid.
  • The answer? All of the above.

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CNBC
 

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