Cost-conscious collegiates, take heed! Before signing your financial future to the likes of Wells Fargo or Citigroup, take a look at the fine print on that loan agreement -- or risk ending up like the 65 percent of Americans surprised by their student loans.
Young Invincibles, a not-for-profit organization based in Washington, D.C., recently surveyed 6,500 undergraduate and graduate students who had taken out student loans.
The results were less than encouraging.
According to Healey Whitsett, author of the study and senior analyst at NERA Economic Consulting, two thirds of those who took out private student loans did not understand the difference between private and federal options. Almost two thirds were surprised by either their repayment terms, their monthly payment or their interest rates. And perhaps most surprisingly, 80 percent of the students surveyed reported gathering some information influencing their decision to take out student loans from their college counselors or website.
As Bloomberg reports, the Federal Reserve Bank of New York claimed outstanding student-loan debt of $867 billion in the fourth quarter.
Recognizing the ever-growing issue of debt from student loans, Congressman Hansen Clarke (D-Mich.) introduced the Student Loan Forgiveness Act of 2012 on March 8. Its goal, as written in the bill, is to "increase purchasing power, strengthen economic recovery, and restore fairness in financing higher education in the United States through student loan forgiveness, caps on interest rates on Federal student loans, and refinancing opportunities for private borrowers, and for other purposes." Young Invincibles, a group that aims to represent the interests of 18 to 34 year-olds, has proposed regulation of the private student loan market with the similar goal of reducing debt from student loans.
Still, the Whitsett study reports a high incidence of misunderstanding among students who take out loans to pay for college. Are you one of the two-thirds of Americans majoring in debt?