Know Your Student Loan Debt
Even though it can take several decades to repay student loans, many students don’t know how much they borrowed. Most don’t know how much money they need to borrow in the first place.
Only 38% of students who used student loans to attend college were able to correctly name how much debt they owed, according to a study by the Brookings Institution, a nonpartisan think tank based in Washington, D.C. Almost half of all students underestimated the amount of debt they held.
"It’s important for students to be aware of how much debt they will take on throughout school. This can impact decisions such as how many classes to take, what to major in and how quickly to finish college," said Elizabeth Akers and Matthew Chingos, the report’s authors.
“Many students look back on their educational experiences with some regret about the financial circumstances,” the duo wrote. “Some wish they had not gone to college in the first place, while others wish they had borrowed less or earned a different degree.”
“The lack of literacy about the personal finances of college is almost certainly leading some students into decisions that they later come to regret,” they added. “The problem with the lack of financial savvy among enrolled college students is that the consequences of their decisions come as a surprise to them once it’s too late.”
College students are also unaware of what their education is costing them, the report found. Only 52% of students were able to identify what they paid for their first year of college, and that was within a $5,000 range. Of the remaining students, a quarter underestimated the cost and seven percent said they did not know.
To find out how much you owe in federal loans, use the National Student Loan Data System, a database run by the U.S. Education Department that keeps track of how much all students borrowed from the government and how much they owe. If you have private loans, it can be more difficult, as the company servicing your loan is not always the company you originally got the loan from.
You can obtain a credit report to determine the company that currently is servicing your student loan and contact them. Your school also might be able to help you contact the correct lender. Because of how private loans are reported, it’s a good idea to get a credit report from all three credit reporting agencies; Experian, TransUnion and Equifax.