With an average student loan debt of approximately $30,000 for college graduates and a total net liability of about $1.5 trillion in student loans, officials from the Department of Treasury are calling for increased financial literacy education for individuals who take out student loans in the future.
A new report from the U.S. Financial Literacy Education Commission is highlighting the importance of long-term financial stability when it comes to deciding how much student loans will be necessary to borrow to pursue a college degree.
In their findings, the authors of the report acknowledge that the cost of attending college has risen dramatically in recent years, with a calculated 34% increase in the overall cost of attendance between 2004-2005 and 2015-2016. Additionally, recent surveys have indicated that approximately one in five college graduates have expressed regret over the amount of funding they borrowed to help pursue a college education, believing that the cost of such an endeavor has not matched up to the benefits that having a college degree produced.
To help alleviate and prevent some of the financial woes that come with borrowing tens of thousands of dollars to finance a college education, officials with the Department of Treasury have produced several recommendations that they hope will be more eye-opening to students when it comes to living responsibly on student loans.
First, officials have called for increasing financial literacy education at the high school level to properly prepare students to begin dealing with finances once they graduate. Recent surveys have indicated that not even one in five students in high school have an acceptable level of financial literacy for their age, and that only 16% of high schools were even required to offer financial literacy education.
Secondly, and perhaps most importantly, officials have recommended that annual “debt letters” be sent to students enrolled in college with student loans each year to help summarize and inform those students about their current financial status as a borrower. While debt letters have always been available, it was noted that just 12 of 50 states currently require universities to send such a letter to their students each year, which could allow students to rack up four years of obscene college debt without ever being sent a statement or bill by the financial aid department before graduation.
While a decrease in overall student debt will likely require the abolition of the federal student lending system to prevent universities from having an unending trough of student loans to build up their campuses with, these tips can still help younger high school students expand their financial knowledge to hopefully plan for college while borrowing as little money from the federal government as possible.
John Patrick (@john_pat_rick) is a graduate of Canisius College and Georgia Southern University. He interned for Red Alert Politics during the summer of 2012 and has continued to contribute regularly.
