Are College Students Borrowing Blindly?

A new report from the Brown Center on Education Policy at Brookings finds that “about half of all first-year students…seriously underestimate how much student debt they have, and less than one-third provide an accurate estimate within a reasonable margin of error.”

Respondents estimates vs. actual levels of debt

These are first-year students. If you “seriously underestimate” your debt as a freshmen, where will you be as a graduating senior?

Check out the full report, which also finds that among students with federal student loans, almost three in ten (28 percent) don’t know they have any federal debt. The report also examines misconceptions about how much students are paying for college. The difference between net price and list price does not seem to be well understood. Net price can be substantially lower than list price due (primarily) to federal and state grants as well as institutional scholarships. Net price is the amount that a student pays, borrows, or earns (via work study) for college.

And in this post, the Brookings report’s co-author Beth Akers discusses three potential consequences of widespread student misinformation about price and debt.

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