77% of Federal Student Loan Borrowers Report Needing More Comprehensive Financial Ed Training Before Taking Out Student Loans

Phoenix, Arizona, July 17, 2018Champion Empow­erment Institute, in cooperation with Givling and with guidance from Champion, conducted an independent survey of federal student loan borrowers and received feedback from hundreds of participants who voluntarily provided detailed information about their higher education and student loan experiences.

This survey included an invitation for essay-style answers on what these borrowers wished they would have known before taking out student loans. The response was astounding—97% of respondents provided detailed answers on their issues, 87% graduated and received a degree or certificate/diploma, and 94% of these respondents graduated with a bachelor’s, master’s or doctorate degree.

With student loan debt reaching a record of $1.521 trillion in July 2018 and since interest rates on student loans increased July 1, 2018, this borrower-perspective feedback shows that the most urgent issue, identified by 77% of participants, was financial literacy education for student loan borrowers.

As a result of this survey, the following needs were identified:

  • FINANCIAL LITERACY EDUCATION with comprehensive, required curriculum beginning in high school before one applies for student loans, including how borrowing affects life for many years, how to manage compound interest, credit and debt management, and the benefits of borrowing only what is needed.
  • PRE-EMPLOYMENT TESTING TOOLS including internships, job shadowing, and personality profiling programs that help students choose an appropriate field of study and where they can ask questions of mentors to better understand the job market and gain realistic beginning and lifetime income expectations.
  • REALISTIC STARTING WAGE ESTIMATORS with easily available searchable information for projected employment opportunities and starting wages at the anticipated graduation or completion date. Students should be able to search and compare geographically before they sign up for a loan to be more realistic about post-graduation opportunities.
  • TRAINING ON HOW TO FUND YOUR EDUCATION for high school students and those seeking post-secondary education to identify and apply for grants, scholarships and micro-scholarships, as well as how to spot an unscrupulous source, basics of crowdfunding, finding “free” funding for education and job training and finding employers that offer student loan repayment assistance.
  • A CHECK AND BALANCE SYSTEM TO PROTECT BORROWERS FROM OVER BORROWING within federal higher education laws and programs that would minimize borrowing and provide repayment schedules that are affordable, fix repayment schedules that may significantly increase or potentially double the amount owed, do not hold borrowers hostage both financially and emotionally and reward good behaviors for completing college on time and making timely payments.
  • MODERNIZING THE CREDIT TRANSFER PROGRAM to increase cooperation with planning curriculum and transfer of credit for degrees taught in community colleges, other institutions and through on-the-job experience will decrease the cost of education.

Many student loan borrowers today are put into repayment plans that pay little to no principal. Most of those monthly payments are nearly or completely all interest payments and often put borrowers into negative amortization where unpaid accrued interest is capitalized and increases their debt burden. These repayment plans that force capitalization have directly contributed to the rapidly increasing national student loan debt statistics. With the increase on student loan interest rates that went into effect on July 1, 2018, this situation will get much worse, further crippling the financial future of many Americans.

For a fuller understanding, please review the 34-page survey document at which includes 151 essay responses.

Read the Federal Student Loan Borrower Survey Overview below for a brief glimpse into the findings.