NEW YORK, April 25, 2019 /PRNewswire/ -- At a time when the growing $1.5 trillion national student debt shows no sign of abating, borrowers often lack basic information about their debt obligations, a survey released today suggests.
The poll of 2,390 Americans over age 18 who have borrowed education funds from public and private lenders found that three quarters of borrowers described the approval process as "very easy" (35%) or "easy" (40%). But nearly half (49%) were unsure of the amount of their minimum monthly payment. In the largest category of borrowers, only 10% of 18-34 year-olds had the precise figure.
The online survey, conducted between March 7th - 18th, 2019, was commissioned by LendKey Technologies, an end-to-end digital lending partner to hundreds of banks and credit unions, and carried out by YouGov.
The survey highlights the opportunity to better educate borrowers on their debt obligations after graduation. Over half (54%) of borrowers say their college or university provided less than "sufficient" information to know what their payments and obligations would be when they had to repay their student loans, including 38% who said no information was provided prior to getting their loan.
"For millions of U.S. students, higher education begins with a significant decision that can impact their financial health for the rest of their lives," said Vince Passione, founder and CEO of LendKey Technologies. "A quality education should begin with sound advice, not only about the best course of study, but also the best means of how to finance it."
Borrowers also indicated having limited loan options presented to them, which potentially prohibited them from being aware of better terms or products that might have been available from other lenders. Just 22% said their school provided a range of lender options, both through the academic institution and outside lenders. But more than 40% said they had only one option, while 9% said they had options through the school but no information about outside lenders.
However, borrower education does seem to be improving as the share of borrowers who reported having helpful information is higher for younger respondents. Sixty-nine percent of respondents 18-34 said they received loan advice, as opposed to 63% among those 35-54-year-olds and 56% of those 55+, suggesting schools are making more of an effort.
"The opportunity to educate borrowers should be embraced by everyone involved in the process, including lenders, financial aid advisors, schools and the borrowers themselves," said Passione. "There may be instances when financial aid offices don't provide information on education funding options beyond federal loans, which may not be sufficient to cover a student's full cost of attendance. With greater access to a wider range of financing options currently in the market, including from community-focused lending institutions, students have more opportunities to explore rates and terms to make informed borrowing decisions."
While 75% of student loan borrowers felt their financing enabled them to attend a school they couldn't have otherwise afforded and earn a higher salary following graduation, only about half of borrowers said they were satisfied with their school choice given their ability to repay the cost, with 25% saying they were "very satisfied," and 29% "somewhat satisfied". Older borrowers were more satisfied with their school choice than their younger counterparts. Just over a third of borrowers over 55 had no regrets, while about 20% each of those 18-34 and 35-54 were satisfied, indicating that higher costs for more recent borrowers impacted their view.
Despite their loan burdens, roughly three quarters (74%) of borrowers who have or are planning to have children said they would help them pay for college, including 51% of millennial borrowers (ages 18-34). Nearly half (48%) said they want their children to be financially independent without the burden of loans, and 43% agreed with the statement, "I want them to have the same opportunities I did."
All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,390 adults who have ever had student loans. Fieldwork was undertaken between March 7th - 18th, 2019. The survey was carried out online.
LendKey originated their lending-as-a-service model to enable white-labeled, digital lending solutions that help financial institutions acquire prime borrowers for a lifetime of lending. LendKey's customized solutions help financial institutions manage liquidity, reduce costs, and mitigate risk. The company revolutionized the lending process for institutions including demand generation, online decisioning, loan origination, servicing, compliance, and balance sheet management. LendKey works with hundreds of credit unions and banks who have deployed more than $2.6 billion in capital to date. Learn more at lendkey.com/lend or email [email protected].