As thousands of college students finalize their financial aid plans for the coming year, a new nationwide survey by Ascent Student Loans has found that while the financial responsibility on students is greater than they expected, they don’t believe the value of a college education is keeping pace with the increasing price tag.
Nearly half of students report they are now shouldering more responsibility for paying for college than originally anticipated – and in most cases are covering at least 50 percent of the total investment. At the same time, more than half of students (51 percent) do not believe the value of a college education has kept up with the rising cost.
The study, sourced from Fulcrum by Lucid and sponsored by Ascent, surveyed 1,027 college students in May 2018 between the ages of 18 and 24, currently enrolled in a four-year bachelor’s degree program who have taken out student loans.
The study also uncovered some significant gaps in student knowledge regarding key facts and concepts relative to student loans and financing options. More than half of students (55 percent) reported being primarily responsible for researching their student loan options and nearly 90 percent claim to be at least moderately knowledgeable on the subject. However, only 32 percent know that interest begins accruing on the date of loan disbursement. Only 21 percent correctly identified the average student loan payment as greater than $200 per month (nearly one-third believe it is less than $100).
Furthermore, the survey revealed that while students believe colleges are doing an effective job educating them about the cost of their education, most schools are falling short when it comes to communicating expected outcomes and ROI.
“The survey findings highlight a shift we have seen ever since the financial crisis – following multiple years of state budget cuts and increased tuition costs, people now regularly view education as an expense, rather than as an investment,” said Ken Ruggiero, Chairman and Chief Executive Officer of Goal Structured Solutions, Inc.(“GS2”), the administrator of Ascent Student Loans. “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.”
With regards to who they turn to most for information, students believe their college financial aid office is most responsible for educating them about financial aid options (36 percent) and is also their most trustworthy source (nearly 50 percent). However, nearly one-third of students believe that private student loan providers have a responsibility to provide financing advice, planning assistance and tools to their borrowers.
Ascent Student Loans, through its Ascent Program for Funding Education, is the only student loan provider that incorporates financial education into the application process and requires all students and co-signers to complete a financial literacy module before approving loans.
“We strongly believe that a loan should help expand opportunities for students,” said Ruggiero. “Through our financial literary program and other planning tools, we’re educating students to ensure they fully understand the options available to them and arm them with information so they can make better decisions.”
College Students Taking on More Financial Responsibility While Lacking Confidence in the Value of Their Education
Study commissioned by Ascent Students Loans reveals interesting insights regarding the cost and financing of higher education
According to a May 2018 nationwide study* by Ascent Student Loans:
- Student’s financial burden is greater than expected. Nearly half of students report they are now shouldering more responsibility in paying for college than originally anticipated.
- The perception of value is not keeping pace with the price tag. 51 percent of students do not believe the value of a college education has kept up with the rising cost.
- There are significant gaps in student knowledge relative to financing options and what their future payments will look like. Only 32 percent know that interest begins accruing on the date of loan disbursement and only 21 percent correctly identified the average student loan payment as greater than $200 per month (nearly one-third believe it’s less than $100)
* Ascent Student Loans surveyed 1,027 college students currently enrolled in a four-year bachelor’s degree program who have taken out student loans. The survey was fielded using the Qualtrics Insight Platform, and Fulcrum provided the panel. Fielding was executed in May 2018.