A new survey by Student Loan Hero finds borrowers are misinformed about interest, repayment, and other major aspects of their student loans.
Austin, Texas, Feb. 16, 2018
With student loan debt higher than ever, it’s crucial for borrowers to understand how their student loans work. But a new Student Loan Hero survey found that borrowers are misinformed about their loans in major ways.
Student Loan Hero quizzed more than 1,000 borrowers with a series of true and false statements about student loans. The findings revealed that many borrowers are uneducated about how their loans work, from how interest accrues to which loans are eligible for forgiveness.
“These myths about student loans can lead borrowers to poor financial decisions, not to mention trap them in debt for longer than they need to be,” said lead researcher Rebecca Safier. “Borrowers should look to trusted resources to learn about their loans so they can make the right repayment choices.”
Here are a few of the most startling misunderstandings among student loan borrowers:
- 71% of student loan borrowers believe that private student loans are eligible for Public Service Loan Forgiveness. However, only certain federal student loans qualify.
- 53% of student loan borrowers think that monthly payments on a standard repayment plan are based on your income. In reality, the federal Standard Repayment Plan requires fixed payments over a 10-year term; your monthly dues are not based on income.
- 52% of student loan borrowers think that you don’t need to worry about accruing interest on unsubsidized student loans while still in school. The truth is that interest accrues on unsubsidized loans from the date they’re disbursed.
These misconceptions could lead to a number of missteps, such as committing to a career in public service only to find out your private student loans aren’t eligible for forgiveness. Furthermore, borrowers who need income-driven repayment on their federal loans might not realize they have to apply for it.
To prevent all this confusion, lenders need to do a better job of educating borrowers and their families about what it means to borrow and repay student loans. Additionally, borrowers need to call their loan servicers and look to reliable resources to fill in gaps in their knowledge.
By being informed, student loan borrowers can come up with the best strategies to conquer debt.
This survey was conducted via SurveyMonkey from Jan. 25-26, 2018, with a nationally representative sample of 1,019 adults living in the United States. “Do you have student loans?” was used as a screening question, with a target answer of “yes.”
About Student Loan Hero
Student Loan Hero combines easy-to-use tools with financial education to help the millions of Americans living with student loan debt manage and pay off their loans. Student Loan Hero has helped more than 150,000 borrowers manage and eliminate over $3 billion in student loan debt since 2012 and assists over 3.5 million people in becoming more financially healthy every year.
Student Loan Hero offers both current and former students free loan calculators as well as unbiased, personalized advice and repayment plans through an easy-to-use online dashboard.
Founded in 2012 by CEO Andrew Josuweit, who himself had over $100,000 in student loans, Student Loan Hero operates on the belief that all loan help and recommendations should come with honesty and no hidden agenda.
For more information, visit https://studentloanhero.com.
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