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.
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.
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.
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.
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.
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.
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.
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 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 9 lenders of 2022!
|Lender||Variable APR||Eligible Degrees|
|2.49% – 11.72%1||Undergrad & Graduate|
|2.50% – 6.30%2||Undergrad & Graduate|
|4.13% – 7.39%3||Undergrad & Graduate|
|2.49% – 7.99%4||Undergrad & Graduate|
|2.49% – 7.99%5||Undergrad & Graduate|
|3.24% – 8.24%6||Undergrad & Graduate|
|2.48% – 7.98%||Undergrad |
|1.74% – 7.99%7||Undergrad & Graduate|
|3.69% – 9.92%8||Undergrad & Graduate|
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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 September 6, 2022.
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 $9 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.
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 April 29, 2021. Information and rates are subject to change without notice.
3 Important Disclosures for LendKey.
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 09/09/2022 student loan refinancing rates range from 4.13% APR – 7.39% Variable APR with AutoPay and 2.99% APR – 9.93% Fixed APR with AutoPay.
4 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.
You can choose between fixed and variable rates. Fixed interest rates are 3.99% – 8.74% APR (3.74% – 8.49% APR with Auto Pay discount). Starting variable interest rates are 2.74% APR to 8.24% APR (2.49% – 7.99% APR with Auto Pay discount). Variable rates are based on an index, the 30-day Average Secured Overnight Financing Rate (SOFR) plus a margin. Variable rates are reset monthly based on the fluctuation of the index. We do not currently offer variable rate loans in AK, CO, CT, HI, IL, KY, MA, MN, MS, NH, OH, OK, SC, TN, TX, and VA.
5 Important Disclosures for Navient.
6 Important Disclosures for SoFi.
Fixed rates range from 3.99% APR to 8.24% APR with a 0.25% autopay discount. Variable rates from 3.24% APR to 8.24% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. 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. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.
7 Important Disclosures for Purefy.
Purefy Student Loan Refinancing Rate and Terms Disclosure: Annual Percentage Rates (APR) ranges and examples are based on information provided to Purefy by lenders participating in Purefy’s rate comparison platform. For student loan refinancing, the participating lenders offer fixed rates ranging from 2.73% – 7.99% APR, and variable rates ranging from 1.74% – 7.99% APR. The maximum variable rate is 25.00%. Your interest rate will be based on the lender’s requirements. In most cases, lenders determine the interest rates based on your credit score, degree type and other credit and financial criteria. Only borrowers with excellent credit and meeting other lender criteria will qualify for the lowest rate available. Rates and terms are subject to change at any time without notice. Terms and conditions apply.
8 Important Disclosures for Citizens.
Education Refinance Loan Rate Disclosure: Variable interest rates range from 3.69%-9.92% (3.69%-9.92% APR). Fixed interest rates range from 4.49%-10.11% (4.49%-10.11% APR).
Undergraduate Rate Disclosure: Variable interest rates range from 6.39%- 9.60% (6.39% – 9.60% APR). Fixed interest rates range from 6.58% – 9.79% (6.58% – 9.79% APR).
Graduate Rate Disclosure: Variable interest rates range from 3.69% – 9.16% (3.69% – 9.16% APR). Fixed interest rates range from 4.49% – 9.35% (4.49% – 9.35% APR).
Education Refinance Loan for Parents Rate Disclosure: Variable interest rates range from 3.69%- 9.09% (3.69%- 9.09% APR). Fixed interest rates range from 4.49% – 9.28% (4.49% – 9.28% APR).
Medical Residency Refinance Loan Rate Disclosure: Variable interest rates range from 3.69% – 9.16% (3.69% – 9.16% APR). Fixed interest rates range from 4.49% – 9.35% (4.49% – 9.35% APR).