Taking out student loans is one of the biggest financial decisions that young people make, but they’re shockingly uninformed when it comes to the basic terms of their loans and they’re often missing out on repayment programs that could yield substantial savings.
A new survey from Iontuition, which offers student loan tracking software, found that 48 percent of borrowers don’t know who their student loan servicer is and 47 percent don’t know their interest rate. Nearly three-quarters of borrowers don’t know how to find out whether they qualify to pay less on their loans.
Those numbers are significant, given that student loans are the fastest growing category of consumer debt and millennials may be pushing off marriage and homeownership because of their debt levels. But less than half of borrowers who are eligible for income-based repayment plans take advantage of them, according to a report last month by the Government Accountability Office.
That’s probably a low estimate, given that last week the federal government expanded its income-based loan repayment plan, giving any American with a student loan the option to cap payments at 10 percent of disposable income starting in December.
Last year, seven in 10 graduating senior had student loans, worth an average of $28,950, according to an analysis by The Institute for College Access and Success. About 17 percent of that debt was in private loans, which are not eligible for federal repayment plans.