Student Debtors Regret Educational Financing Decisions
Apply for a Loan
Secured with SHA-256 Encryption
UPDATED: May 10, 2013
Advertiser Disclosure: We strive to help you make confident loan decisions. Comparison shopping should be easy. We are not affiliated with any one loan provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about loans. Our goal is to be an objective, third-party resource for everything loan related. We update our site regularly, and all content is reviewed by experts.
On average, 60 percent of student loan borrowers regret their financing choices for higher education, according to a recent survey by the American Institute of CPAs (AICPA).
According to 2012 statistics from the Federal Reserve Bank of New York, student loan debt impacts over 39 million adults in the United States. This is a 70 percent increase from 2004.
Ernie Almonte, chair of the AICPA’s National CPA Financial Literacy Commission, said this difficult reality will become apparent to many new graduates in the coming weeks.
The AICPA survey, which was conducted via telephone interviews with student loan borrowers and their parents, also found that three out of four borrowers and their parents have been forced to make personal or financial sacrifices due to monthly student loan payments. Several of those sacrifices include postponing major life purchases such as waiting to purchase a car (40 percent of respondents), waiting to buy a house (29 percent) and postponing a wedding (15 percent).
Almonte told loans.org that education can be a powerful investment, but it has to be handled properly.
Few consumers view student loan debt and their educational experience as a regular investment. He said that true investments should account for risk, reward and return on investment.
When Almonte advises his clients before buying a home, they review the full monthly and yearly costs associated with the purchase. Student loans borrowers do not always do this. He said that borrowers fail to separate their wants from their needs.
One way to lower overwhelming debts is to set limitations on the amount of debt needed. Financial experts suggest that students should take out less than they expect to earn during the first year of their new job. For example, a student borrower who expects to become a drama teacher and earn $30,000 their first year should not strap themselves with college-related debts over that amount.
“If you actually take the time to run the numbers … I think people would come to a different conclusion,” Almonte said about students’ choice of schools.
Another major way to prevent escalating debt is offering financial education earlier on. Almonte said if children and teenagers are taught to make financial decisions and mistakes earlier on, when the time comes to make a decision about higher education, they will make the right one.
“If we start early, they will be able to handle this major decision better than they do today,” he said.