NEW YORK (MainStreet) — With total U.S. student loan debt rising to $1.1 trillion and more than 1 million college students joining the burdened each year (1.3 million in 2012, up from 0.9 million in 2004), a growing number of collegians say they're having "regrets" about taking on all that financial obligation.
A report from the Boston-based American Consumer Credit Counseling shows 71% saying they "would have made different education choices if they could have forecast the burden of repaying student loans."
Another 57% say they didn't understand the student loan repayment process, a problem the ACCC ranks alongside not understanding a mortgage loan when buying a house. And 17% said they would have forgone college altogether if they knew they'd owe so much money from loans.
"The cost of a college education is rapidly becoming one of the largest financial challenges that Americans will face in their lifetimes," says Steve Trumble, chief executive at ACCC. "Students want a better understanding of what return they will get on that investment. And many former students feel they might have made different choices if they knew how difficult it would be to manage their college debt."
The Federal Reserve notes that total student loan debt has quadrupled since 2003, and that student loan debt now exceeds any other form of consumer debt (besides mortgages loans), including credit card debt. Average student loan debt for college borrowers stands at $30,000 these days, according to the Fed.
Consequently, it's no wonder so many borrowers are having those second thoughts.
"When the financial burden of attending college is so daunting that it makes people rethink higher education completely, it's clear we have a problem," Trumble says. "Americans need better resources for planning college loan repayment and better options for getting help when they are under financial strain."
The ACCC is calling for mandatory counseling for college students and their families before they take on student debt, specifically a "standardized format and content structure of financial award letters."
That might give borrowers a better idea on what they're getting themselves into long term, an important goal given the higher unemployment rate for Americans (now 8.5% for college graduates between 21 and 24, with 16.8 % of new graduates "underemployed" according to the Economic Policy Institute.
There's no guarantee a standardized awards letter would sway 18-year-olds with visions of college life in their head. But until a better idea comes along, the "awareness" approach will have to do.
— By Brian O'Connell at MainStreet