It is estimated that a quarter of American adults currently have student loans to pay off and most do not have the financial skills to successfully manage debt. For the average student in the 2016 class, the student loan debt is $ 37,172. The average debt of Missouri State graduates is $ 21,884.
In a new study, Lu Fan, an assistant professor of personal financial planning at the University of Missouri, found that borrowers do not have the appropriate education to manage student debt. She suggests that more should be done to educate borrowers about debt management as well as about the various repayment options they might have.
“Most borrowers, 55 percent, reported being worried about their student loans; however, only 30 percent of borrowers said they had received financial education on paying off student loans, ”Fans said. “In addition, only 40 percent of borrowers reported having a financial impact from their parents. Given the number of people who need student loans to attend college, we need to do better in educating borrowers. “
Using the 2015 National Financial Feasibility Study dataset, University of Georgia professor Fan and Sven Chterey found that student loan debt puts borrowers under stress. The researchers looked at more than 2,600 data set responses, focusing on respondents who had a student loan, aged 24-65, were no longer students, were employed, and were key decision makers in their household.
Researchers found that women were less likely to be late with student loan payments but more likely to be concerned about their student loans. Men were less concerned about their debt and were more likely to file late payments. They also found that people with non-college loans were more worried about paying off loans than those with degrees.
Fans believe that borrowers do not get the information they need to make the best financial decisions, and that policymakers and lenders should do more to educate borrowers.
“I hope policymakers use this information to develop financial education programs,” she said. “Better educational resources designed for specific audiences – parents, young adults, women and households that have experienced income losses – will generate more educated borrowers.”