Is going to college worth the cost of student loans? Today’s college students aren’t so sure, according to a new survey.
A report from Ascent Student Loans reveals that today’s college students are paying more than they expected for a higher education. Yet despite assuming more responsibility for education costs, many of these students are unsure whether college will pay off as an investment.
Most undergrads doubt college and student debt are worth it
More than half of students surveyed said they don’t believe the value of a college degree has kept pace with the rising costs of attendance.
These students’ doubts reflect a real trend: College costs have far outpaced the positive outcomes after graduation. Since the late 1980s, the price of a higher education has risen by 213%, according to our recent analysis of costs across generations. Comparatively, wages have risen by 67% since the 1970s.
But despite soaring costs, a bachelor’s degree can be worth pursuing. College graduates outearn high school graduates by $19,400 per year, according to our study of returns on investment for a bachelor’s degree.
But not all students might be aware of this fact. While most undergrads said colleges were clear about the costs of their education, they also said their school didn’t educate them about the outcomes and returns on investment they could expect after graduating, according to the Ascent Student Loans survey.
College students taking on more responsibility for college costs
College tuition inflation may be easing up, but students still feel as though they’re shouldering a heavy burden. Almost half of undergrads surveyed by Ascent Student Loans said they’re paying for more of their college costs than expected. More than 60 percent said they were covering more than half of their college costs on their own.
Unfortunately, students often have few resources to pay for college out of pocket. A part-time job or work-study program can help cover some college costs, as can grants and scholarships. When students exhaust these options, however, they may be inclined to take out loans to fill a funding gap.
Take graduates of the Class of 2017, for example. The average student debt amount was $39,400 — 6% higher than that for the Class of 2016.
Students: Do your research and make informed decisions
More than 55% of students in the Ascent Student Loans survey said they were the main person researching and making choices about their education loans. But despite being in charge of these important decisions, students overestimate their knowledge on the subject.
Most didn’t understand how student loan interest works or have a realistic idea of how much their student loan payments would be. Clearly, many of these students are making decisions without always having sufficient information.
“We need to once again take an investment approach, and arm students and their parents with information and guidance that will help them better align their level of investment with expected outcomes, such as graduation rates and expected earnings,” said Ken Ruggiero, chairman and CEO of Goal Structured Solutions, the administrator of Ascent Student Loans, in a statement about the survey.
Students should continue to inform themselves about education costs and student debt before enrolling, during school, and after graduation. Consider these tips.
Compare colleges and make affordability a top criterion. Choosing a low-cost college can save you tens of thousands of dollars over the course of earning a four-year degree. Consider other strategies to keep costs low, such as prioritizing public colleges or attending a community college and then transferring in your junior year.
Learn more about student loans. Calculate how much you’ll need in student loans. That way, you’ll avoid overborrowing and ensure this debt stays affordable. Read up on how interest works, the terms of your student debt, and how to calculate your student loan payments. You’ll need to know all of this and more to effectively manage student debt both now and after graduation.
Have a plan for your post-college career. It might be wise to research college majors and choose one that will lead to better employment opportunities and higher pay. And while it’s fine if your dream job doesn’t come with a big salary, you should at least project how much you’ll make after college to ensure that the debt you’ll face will be affordable.
Students can’t always control their college costs or outcomes, but they can do their part to become informed about their options and make wise choices. A student heading into college with this reality-based understanding of the potential costs and payoffs can confidently decide if college is worth it for them.
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|1 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB). Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. Loan products may not be available in certain jurisdictions, and certain restrictions, limitations; and terms and conditions may apply. Ascent is a federally registered trademark of Turnstile Capital Management (TCM) and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
2 Important Disclosures for CollegeAve.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
Information advertised valid as of 2/1/2019. Variable interest rates may increase after consummation.
3 Important Disclosures for Discover.
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2019 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
6 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
7 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
8 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|4.26% – 13.26%1||Undergraduate and Graduate|
|4.20% – 11.44%2||Undergraduate, Graduate, and Parents|
|4.84% – 13.49%3||Undergraduate and Graduate|
|4.62% – 11.47%*,4||Undergraduate and Graduate|
|4.38% – 13.38%5||Undergraduate and Graduate|
|5.85% – 6.99%6||Undergraduate and Graduate|
|3.95% – 9.81%7||Undergraduate, Graduate, and Parents|
|4.47% – 12.34%8||Undergraduate, Graduate, and Parents|