Borrowing is one of three ways to finance postsecondary education besides savings and current income. Nearly 70 percent of undergraduates need to borrow to help pay their assigned student and family expected contribution responsibilities.
Students who borrow are more likely than non-borrowers to attend full-time for an entire year, limit their hours of work during the school year or attend higher priced colleges. Although the percentage of students who borrow decreases as family income rises, students from all income groups take out student loans. Students attending institutions with a higher price of attendance were more likely to borrow than those attending institutions with lower prices of attendance. Students receiving graduate degrees of master’s or higher borrow more to complete their degrees.
More information on how much graduates borrow.
Even small amounts of debt are a problem if the borrower has little income after leaving school, but different levels of debt appear appropriate to different borrowers. One borrower may find payments of eight percent of income to be too much of a sacrifice. Another may find payments of 15 percent of income to be worthwhile depending on income post-graduation.
In national studies, failure to complete a postsecondary program along with low annual income after leaving school are most associated with higher defaults.
Debt counseling tools include letters and Email messages to borrowers, videos, brochures, toll-free customer hotlines, internet loan counseling information, interactive repayment calculators, interviews before students take out their first loans and interviews before students leave school.
The Minnesota SELF loan program requires borrows to participate in an online counseling tool.
More information on SELF counseling.