Average student loan debt surpasses $23,000 for many recent graduates
FREDERICKSBURG, Va.--(COLLEGIATE PRESSWIRE)--Nov 1, 2004--Only one-third of recent four-year college graduates have consolidated their federal student loan debt, according to a survey released today by Collegiate Funding Services (NASDAQ NM: CFSI). On average, recent four-year graduates who have not yet paid off their loans, carry a balance of $23,485 and have monthly payments of $184, the survey found.
The ``2004 Collegiate Funding Services Planning and Paying for Higher Education Survey`` commissioned by CFS and conducted by Harris Interactive(R) is an annual benchmark of college students` and graduates` attitudes and opinions toward student loan debt.
This year`s survey finds that despite historically low interest rates, only 35% of recent four-year college graduates with federal student loans have taken advantage of an opportunity to lock in a low fixed interest rate and extend their repayment terms through consolidation, thereby potentially reducing their monthly student loan payments by more than half. This is perhaps attributable to the survey`s finding that 41% of recent four-year graduates who used a federal loan to help pay for college are unaware of the Federal Consolidation Loan Program - a program enacted by Congress to help make repaying federal student loan debt more manageable.
The lack of awareness about the program is especially unfortunate for recent graduates who may be able to lock in an additional 0.6% interest rate reduction if they consolidate during their ``grace period,`` typically the six-month period following graduation before student loans enter repayment. Depending on their loan amount, the reduced interest rate could potentially save recent graduates up to thousands of dollars in interest over the life of their loan. The grace period ends in November for the majority of the class of 2004.
The Federal Consolidation Loan Program enables student loan borrowers to combine their existing variable rate federal student loans into a single fixed interest rate loan with extended payment terms that can trim monthly payments by up to 55% - or by as much as 58% if borrowers consolidate before their grace period ends.
``Student loan consolidation is a powerful financial tool available to those looking for increased flexibility and a lower monthly payment,`` said J. Barry Morrow, CEO of Collegiate Funding Services. ``Unfortunately, too many students are still not aware of the benefits of consolidation and continue to be saddled with large monthly student loan payments at a time in their lives when every penny counts.``
The annual benchmark survey also found the following impact of student loan debt/monthly student loan payments for recent four-year graduates:
* More than half of those who have not paid off their loans (51%) have $20,000 or more in student loan debt; more than one-third (37%) pay $200 or more in monthly student loan payments.
* One-third (33%) were surprised at the amount they were required to pay when their first monthly student loan bill arrived.
* More than one-third (36%) of graduates who have received a student loan bill say they were unprepared to make the monthly payments.
* Nearly six in 10 (59%) recent four-year college graduates with student loan debt are hindered or prevented from fulfilling other financial objectives such as purchasing a vehicle.
* One-third (33%) of these are foregoing or delaying paying down credit card debt.
* More than four in 10 (41%) of these are delaying or foregoing contributing to a savings account.
* Twenty-three percent (23%) report that student loan payments forced them to take a job other than one they would have preferred in order to make ends meet.
``While federal student loans make paying rising college tuition costs possible, the reality is that many graduates do not have adequate income to repay their loans while establishing themselves once they are out in the workforce,`` Mr. Morrow said. ``During the early post-graduate years when graduates are settling into entry-level jobs, consolidating student loan debt is the easiest and smartest way to free up funds to help meet other financial needs and obligations.``
Survey findings show that student loan debt is having an impact on recent four-year college graduates, affecting short-term financial decisions and purchases, as well as long term financial planning such as the ability to begin building a nest egg early on in their careers. Resulting financial pressures also appear to be affecting these graduates, with more than half of recent graduates (52%) reporting elevated levels of stress associated with their student loan debt.
Methodology
Harris Interactive conducted the ``2004 Collegiate Funding Services Planning and Paying for Higher Education`` survey for Collegiate Funding Services. The survey was conducted online from April 1, 2004 to April 20, 2004, with 1,425 U.S. associate`s program seniors, bachelor`s program seniors, and recent graduates of associate`s and bachelor`s degree programs (those who received an associate`s or bachelor`s degree in 2001, 2002, 2003, or 2004) responding, 695 of whom are four-year program graduates. All respondents used student loans to help pay for their college education. Figures for age, gender, race/ethnicity, region, educational level and income were weighted where necessary to bring them into line with their actual proportions of the population.
In theory, with probability samples of this size, one can say with 95% certainty that the results for the overall sample have a statistical precision of +/- 5 percentage points. Statistical precision for samples: recent four-year graduates (695), four-year graduates who used a federal loan (668), who have not yet paid off their student loan (663), who have received a student loan bill (491) and whose loans hinder them from meeting their financial objectives (410) is higher and varies. This online sample was not a probability sample.
About Collegiate Funding Services
Collegiate Funding Services is a leading education finance company dedicated to providing students and their families with the practical advice and loan solutions they need to help pay for and manage the cost of higher education. Collegiate Funding Services also offers a comprehensive portfolio of education loan products and services � including loan origination, loan servicing, and campus-based, scholarship and affinity marketing tools � to the higher education community. Since 1998, Collegiate Funding Services has facilitated the origination of over $16 billion in education loans, and currently manages over $10 billion in student loans for more than 400,000 borrowers.
For additional information, visit www.cfsloans.com or call 1-888-423-7562.
About Harris Interactive(R)
Harris Interactive (www.harrisinteractive.com) is a global research firm that blends premier strategic consulting with innovative and efficient methods of investigation, analysis and application. Well-known for The Harris Poll(R) and for pioneering Internet-based research methods, Rochester, N.Y.-based Harris Interactive conducts proprietary and public research to help its clients around the world achieve clear, material and enduring results.
Harris Interactive combines its intellectual capital, databases and technology to advance market leadership through its U.S. offices and wholly owned subsidiaries: London-based HI Europe (www.hieurope.com), Paris-based Novatris (www.novatris.com), Tokyo-based Harris Interactive Japan, recently acquired U.S.-based WirthlinWorldwide (www.wirthlinworldwide.com) and through a global network of affiliate firms.
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