Smart (and Dumb) Money Moves Students Are Making This Year According to Our Survey

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Student Loan Survey 2016-17
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As the costs of higher education have continued to climb, everyone from parents to policymakers are wringing their hands over student loans. Current students are right in the middle of the college cost crisis. So how are they coping in the face of immediate educational expenses — and the prospect of student loan repayment post-graduation?

We surveyed over 1,000 undergraduate students enrolled at least half-time to see what kind of costs they are facing this school year, and how they are planning to tackle them. Here’s what we discovered.

2016-17 college costs and student loan use

Many students say they are considering costs and potential earnings when choosing a college and major. A majority of students show signs of smart decision-making by considering costs and future earnings when choosing a school and major.

Student Loan Survey 2016-17

Four out of five students attending school this year agree that their choice of college was impacted by costs of attendance. For students concerned about costs, this focus led them to low-cost schools. Students facing costs under $20,000 are the most likely to say cost was a major deciding factor.

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Nearly half of students have reasonable education costs for the 2016-17 school year, with total costs under $10,000. An additional 26 percent are facing costs between $10,000 and $20,000. This means three-quarters of students are keeping costs below the 2013-14 annual average of $24,706, the most recent estimate reported by the US Department of Education.

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Current students are also reporting a low reliance on student loans. Half say that they wouldn’t be covering any college costs with student loans. Another 23 percent of respondents said they were relying on education loans for only up to half their total costs.

Choosing colleges and majors with careers in mind

Students’ choices of majors indicate an awareness of how these decisions will affect them once they graduate. Two-thirds of students say they were certain of their majors when choosing a college or university. Two-thirds also agree that their future earnings potentials impacted their chosen areas of study.

Of the fields of study from which survey respondents could choose, Science, Technology, Engin­eering, and Math (STEM) majors are by far the most popular, with over half of students studying in this field.

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Students in this field are the most likely to say they won’t use student loans to cover this year’s costs, a sign that they are more likely to graduate with lower student loans. Even better, STEM majors are in high demand and commanding some of the highest starting salaries right out of college, according to the National Association of Colleges and Employers.

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Business and Health & Medicine are the two areas of study most common after STEM majors, with a respective 11 percent and 10 percent of students in each field. Students who chose a major related to business or health are also the most likely to agree that their choice was impacted by future earning potential.

More than two-thirds of students agree that salary and career earning potential impacted their choices or college majors. On the other hand, 17 percent disagree that salary considerations impacted their choice. Social Science and Arts & Humanities majors are the students who disagree with this statement most often.

9 in 10 students follow their passions

It’s encouraging to see so many students looking ahead to their careers and weighing their potential earnings when making educational choices. But it’s still more common to follow passion than practicality when deciding on a major.

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In all, 88 percent agree that they chose their major  based on passion, compared to the 67 percent impacted by earning potential.

Arts & Humanities majors, while less likely to be impacted by earnings considerations, are the most likely of any major to choose their study field based on passion at a rate of 96 percent. Those majoring in the STEM field aren’t far behind, with 92 percent reporting a passion for their chosen field.

2 in 5 fund non-educational bills with student loans

A troubling behavior many students report is using their student loans for expenses that are not directly related to education. Two in five say that they would at least use student loans to cover monthly bills.

This indicates that current students are more willing to use loans to cover non-education costs than even the most recent cohort of graduates. The Class of 2016 reported a rate of non-educational use of student loans that was half of current students’, according to a Student Loan Hero survey of recent graduates.

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In addition to those paying for monthly bills, one in five respondents are using those funds to cover car costs like a payment or insurance. It’s possible that for many students, these are necessary expenses in their college budgets — phones might be used to keep up on assignments and cars could be needed for a commute to class.

But plenty of students are using their funds for more frivolous costs, as well. Fifteen percent say they will use student loans to pay for clothing and accessories, and 13 percent will spend student loan money at restaurants. About 3 percent of students plan to use student loan money to fund vacations and another 3 percent will spend it on alcohol or drugs.

Some students don’t know their costs

Despite the majority that’s facing lower costs and foregoing student loans, a significant portion of respondents are still choosing high-cost programs. More than 8 percent of students have annual costs over $30,000.

Higher costs also correlate to a higher reliance on student loans to cover their schooling. Students with costs of $30,000 or more are 60 percent more likely to use student loans to cover the majority of their educational expenses than those with costs under $30,000.

Perhaps the more troubling students are the 7 percent who say they don’t know what their costs of the 2016-17 school year will be. This clueless cohort is also the most likely to not know how much they would rely on student loans in the coming year.

Without an awareness of expenses and a plan to cover them, these students will have less control over their costs. This could leave them scrambling at the last minute to cover their expenses, possibly relying more heavily on loans.

Overall, however, most students enrolled for the 2016-17 school year say they are aware of costs and their future earning potentials. These students should use this information to keep costs and student balances low, and maximize their earning potential after graduation.

Even as student loan costs continue to rise, today’s students can make smart choices and avoid the pitfalls of over-borrowing in college and under-earning after graduating.

Survey methodology

Survey was conducted via Google Consumer Surveys on behalf of Student Loan Hero on Sept. 8, 2016, with a nationally representative sample of 1,019 undergraduate students currently enrolled at least half-time in the United States. “Are you currently an undergraduate college student enrolled at least half-time?” was used as a screening question (with a target answer of “Yes”).

Interested in refinancing student loans?

Here are the top 6 lenders of 2020!
LenderVariable APREligible Degrees 
1.89% – 6.66%1Undergrad
& Graduate

Visit Splash

1.89% – 5.90%2Undergrad
& Graduate

Visit Laurel Road

2.25% – 6.09%3Undergrad
& Graduate

Visit SoFi

1.99% – 5.34%4Undergrad
& Graduate

Visit Earnest

1.98% – 8.55%5Undergrad
& Graduate

Visit Lendkey

2.39% – 6.01%Undergrad
& Graduate

Visit Elfi

Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Splash Financial.

Splash Financial Disclosures

Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.

The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.

To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of October 1, 2020.


2 Important Disclosures for Laurel Road.

Laurel Road Disclosures

All credit products are subject to credit approval.

Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.

As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.

  1. Checking your rate with Laurel Road only requires a soft credit pull, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
  2. Savings vary based on rate and term of your existing and refinanced loan(s). Refinancing to a longer term may lower your monthly payments, but may also increase the total interest paid over the life of the loan. Refinancing to a shorter term may increase your monthly payments, but may lower the total interest paid over the life of the loan. Review your loan documentation for total cost of your refinanced loan.
  3. After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship. During any period of forbearance interest will continue to accrue. At the end of the forbearance period, any unpaid accrued interest will be capitalized and be added to the remaining principle amount of the loan.
  4. Automatic Payment (“AutoPay”) Discount: if the borrower chooses to make monthly payments automatically from a bank account, the interest rate will decrease by 0.25% and will increase back if the borrower stops making (or we stop accepting) monthly payments automatically from the borrower’s bank account. The 0.25% AutoPay discount will not reduce the monthly payment; instead, the discount is applied to the principal to help pay the loan down faster.

Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.

Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.

Interest Rate: A simple annual rate that is applied to an unpaid balance.

Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.

KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.

This information is current as of September 9, 2020. Information and rates are subject to change without notice.
 


3 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance: Fixed rates from 2.99% APR to 6.09% APR (with AutoPay). Variable rates from 2.25% APR to 6.09% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.25% APR assumes current 1 month LIBOR rate of 0.18% plus 2.32% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. See eligibility details. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score. Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. 

4 Important Disclosures for Earnest.

Earnest Disclosures

To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.

Earnest fixed rate loan rates range from 2.98% APR (with Auto Pay) to 5.49% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.34% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of October 26, 2020, and are subject to change based on market conditions and borrower eligibility.

Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.

The information provided on this page is updated as of 10/26/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.

© 2020 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.


5 Important Disclosures for LendKey.

LendKey Disclosures

Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it  endorse,  any educational institution.

Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of  5 years and is reserved for applicants with FICO scores of at least 810.

As of 10/15/2020 student loan refinancing rates range from 1.98% APR to 8.55% Variable APR with AutoPay and 2.99% APR to 8.77% Fixed APR with AutoPay.

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.