Sunday, December 21, 2014

What Students Don’t Know About Their Loans - David Leonhardt, NY Times

The real problem are people who tend to have less debt — say, $10,000 or $20,000 — but who never graduate from college or who earn a degree or certificate with relatively little value. Many of these students don’t understand what they’re getting into when they enroll in college. They don’t realize that the medical-assistant certificate program in which they’re enrolling won’t do much to improve their job prospects. Or they don’t understand that the two- or four-year college that they have chosen has a dreadfully low graduation rate. Compounding the problem, these students also tend to underestimate how they much debt they will take on, according to a study released today by the Brookings Institution. Only 24 percent of first-year students with federal loans were able to estimate their loan amount within 10 percent of its actual value.

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