College Grads Get Failing Grade in Finances
April 25, 2019
Higher tuition costs and interest rates on loans mean college students are taking on more debt and taking longer to pay it off. However, the problem is exacerbated by the fact that, according to a new study, college students and graduates just don’t know the basics of how their loans work.
The study, conducted by Sallie Mae, looked at hundreds of current students’ and recent graduates’ financial literacy. Part of the study asked the students and grads four basic questions about interest rates and loan repayment. Less than a quarter (24 percent) of college graduates answered all of them correctly. A little more than 1-in-10 (11 percent) current students got them all right.
The lack of knowledge could end up keeping students in debt longer and costing them more, not just on their student loans, but with consumer credit as well. The study found that 83 percent of graduates have at least one credit card, but that just 60 percent pay off their balances in full and on time each month. Such decisions hurt their credit, cost them more, and keep them in debt longer.