I’ve been helping people with financial problems since 1994. And in that time I’ve seen all sorts of suggestions to inoculate consumers from money problems. Most of the suggestions surround the need for kids to have more financial literacy education. Sounds logical, right?
But my mouth is hanging open as I read the latest college student survey from LendEDU.
The tragedy their survey exposes has nothing to do with students not having a financial literacy class. It seems to do more with a complete lack of caring about the entire student loan process, from start to finish.
When nearly three out of four students think Sallie Mae is a person and not a massive student loan company now known as Navient – I’m stunned.
How can you even begin to understand the basics and fine points of the student loan you just signed for when you don’t even know the name of the company that is holding or servicing your student loan? Yet 75 percent of students surveyed they know how interest rates work.
I stand behind my position that financial literacy classes are not an inoculation against money problems. Before any sort of class will be effective, you’ve got to give a damn about wanting to know more and understand your loans, and not just how interest rates work. It is doubtful any class is going to successfully teach someone to be engaged and care.
Here are more of the results from the LendEDU survey that will make a little bit of vomit appear in your mouth.
97.9 percent of students surveyed do not know which loans accumulate interest in-school or during deferment
93.9 percent of students surveyed don’t know their repayment terms
92.9 percent of students surveyed do not know the difference between subsidized and unsubsidized loans
92.1 percent of students surveyed don’t know their current interest rates
75.9 percent of students surveyed with private student loans do not know the major differences between private and federal student loans
71.1 percent of students surveyed do not know the basic risks of a cosigner
58.1 percent of students are not sure or strongly disagree they will be able to fully pay off their student loans.
Now keep in mind, these are students who have already been through some sort of student loan introduction or counseling about student loans. And yet the students survey were totally clueless.
It is not wonder the numbers of people drowning in student loans is exploding, even as I write this.