For young Americans coming of age today, the road to economic opportunity runs
through the halls of higher education. Unfortunately, that path has grown financially
challenging. Tuition at four-year public schools, where most postsecondary students
study, outpaced inflation by nearly six percent over the past decade. Prices at
community and private nonprofit colleges jumped as well. At public institutions,
falling state and local appropriations continue to drive tuition hikes.
Students increasingly rely on loans to finance their education, and they are
borrowing increasing amounts. Nearly one in five American households has student
loan debt, amounting to 37 million individual Americans and more than one trillion
dollars in education debt. Although postsecondary degrees remain lucrative
investments, large monthly payments and high youth unemployment have pushed
many borrowers into default. College affordability has become one of the signature
policy challenges facing our country.
A crucial component of limiting the price students pay for college is simply providing
them with better information. Earlier this year, NERA Economic Consulting
(“NERA”) and Young Invincibles (“YI”) surveyed high-debt borrowers about the
problem. The results were striking: over two-thirds of respondents expressed
some misunderstanding or surprise about their student loans, particularly relating to
repayment terms, monthly payments, and interest rates.