Student Loan Debt Changes Perception of Education
The cost of an average college education is around $30,000; Some former students would have avoided college because of cost.
(Boston, MA) – October 21, 2014 — Budget-conscious Americans have second thoughts about their careers when they evaluate the cost of student loans, according to a new survey by American Consumer Credit Counseling. In fact 71 percent of those surveyed said they would have made different education choices if they could have forecast the burden of repaying student loans. Total student loan debt reached $1.1 trillion this past year.
“The cost of a college education is rapidly becoming one of the largest financial challenges that Americans will face in their lifetimes,” said Steve Trumble, President and CEO of American Consumer Credit Counseling. “Students want a better understanding of what return they will get on that investment. And many former students feel they might have made different choices if they knew how difficult it would be to manage their college debt.”
The ACCC poll of 170 people at ConsumerCredit.com showed 57 percent of those surveyed did not understand the student loan repayment process before taking out loans. Of those respondents, 71 percent would have chosen a different path for their education. A quarter of all respondents would have chosen a different field, while 19 percent would have attended a different school. The ACCC survey also found that 17 percent would have chosen to avoid college altogether given their current student loan debt.
“When the financial burden of attending college is so daunting that it makes people rethink higher education completely, it’s clear we have a problem,” Trumble said. “Americans need better resources for planning college loan repayment, and better options for getting help when they are under financial strain.”
There has been a shift of focus from the liberal arts to more trade specific majors in order to ensure employment after graduation. According to the Federal Reserve Bank, the average total debt for student borrowers in 2013 was $30,000.
NERA found that over two-thirds of consumers with student loans expressed a misunderstanding of their student loans, and 40 percent did not receive any sort of loan counseling about their federal student loans, even though this counseling is mandated by law. NERA also reports that over 90 percent of Americans believe that due to the complex nature of loan terminology, there should be a standardized format and content structure of financial award letters. These barriers prevent people from fully understanding their student loans and make it difficult for average Americans to fully quantify what they owe.
Repayment of student loans is financially burdensome to people who have just graduated school. The ACCC survey found that 23 percent of people are making payments between $250 and $500. Debt repayment, in many cases, prevents people from actively saving for the future.
The Economic Policy Institute reports that 8.5 percent of graduates between the ages of 21 and 24 were unemployed and 16.8 percent of new graduates are underemployed.
American Consumer Credit Counseling (ACCC) has created an infographic to illustrate their findings and other statistics on this subject, which can be found here: http://www.consumercredit.com/financial-education/infographics/were-your-student-loans-worth-it.aspx
ACCC is a 501(c)3 organization, that provides free credit counseling, bankruptcy counseling, and housing counseling to consumers nationwide in need of financial literacy education and money management. For more information, contact ACCC:
- For credit counseling, call 800-769-3571
- For bankruptcy counseling. call 866-826-6924
- For housing counseling, call 866-826-7180
- Or visit us online at ConsumerCredit.com
About American Consumer Credit Counseling
American Consumer Credit Counseling (ACCC) is a nonprofit credit counseling 501(c)(3) organization dedicated to empowering consumers to achieve financial management and debt relief through education, credit counseling, and debt management solutions. Each month, ACCC invites consumers to participate in a poll focused on personal finance issues. The results are conveyed in the form of infographics that act as tools to educate the community on everyday personal finance issues and problems. By learning more about financial management topics such as credit and debt management, consumers are empowered to make the best possible financial decisions to reach debt relief. As one of the nation’s leading providers of personal finance education and credit counseling services, ACCC’s certified credit advisors work with consumers to help determine the best possible debt solutions for them. ACCC holds an A+ rating with the Better Business Bureau and is a member of the Association of Independent Consumer Credit Counseling Agencies. To participate in this month’s poll, visit ConsumerCredit.com and for more financial management resources visit TalkingCentsBlog.com.