Hat tip to my college buddy, Andy Kavulich for making me aware of a push in New Jersey to educate high school students about student loans. From NJ.com:

As state Sen. Sandra Cunningham met with college students in recent months, she noticed a disturbing trend, she said.

New Jersey’s high school graduates have been going off to college with little knowledge about financial aid and student debt, Cunningham told the Senate Higher Education Committee on Monday.

“Every one of those students talked about the fact that they had no idea about what kinds of things would available to them financially,” Cunningham (D-Hudson) said.

Cunningham and state Senate President Stephen Sweeney (D-Gloucester) are pushing legislation they think will change that. Their bill, passed by the Higher Education Committee, would make it a high school graduation requirement for students to meet with a school counselor and receive information on grants, student loans and repayment of debt.

Certainly a positive development (I just hope it is not an unfunded mandate as school counseling depts. will need to be increased), especially in light of more research about how clueless many students are about student debt.

From Bloomberg.com:

A new study suggests that young people with education debt don’t know the most basic facts about their loans. The survey, conducted in January by Lendedu, a company that provides information about loan refinancing options, adds to a growing body of research into the widespread ignorance among young people about debt that could follow them to their graves.

When Lendedu talked to 477 undergraduate and graduate students at three Bay Area campuses, it found that just 6 percent of them knew how long they would be repaying the debt. Only 8 percent knew the interest rate on their loan.

This is just another data point confirming what a Brookings Institute study told us earlier:

Of 599 undergraduates surveyed by Brookings in 2014, just 38 percent of those with loans were able to identify how much they had borrowed. Nineteen percent underestimated their total loans, and 28 percent overestimated the figure. Brookings also found that only a slight majority of students (52 percent) knew how much their colleges were charging them in tuition and room and board.  

And yet, student loans (and paying for college) don’t even warrant a mention in most of the finlit national standards out there. What’s wrong with this picture?

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.