Paying Back Student Loan Top Concern for Many Graduates

Over half of college graduates are worried about paying back their student loans but are missing key ways to build a strong financial foundation, according to a study sponsored and released by Capital One Bank.

According to FinAid.org and Fastweb.com., the average student loan for this year’s graduate is almost $23,000 - quite a hefty debt for someone just starting out in their career.

For college seniors and recent graduates, the survey found that of the 69 percent who have undergraduate student loans to repay, 60 percent are “very” or “somewhat” worried about their ability to pay back their loans.

The survey also found that 55 percents of students are “very concerned” about building a good credit history - suggesting that almost half don’t care too much about it. Interestingly, 62 percent of the students surveyed felt they were “highly” or “very” knowledgeable about managing their money, but only 43 percent are adding to their savings at least monthly.

“By the time they graduate from college, most young adults have begun to establish a credit history - most have student loans and many have a credit card in their name. These survey results suggest that most new college graduates understand the need to manage their money - particularly their credit - carefully. However, the results also highlight the need for young adults to take a look at their spending habits and prioritize savings as a way to build financial security," said Dr. Mary Ann Campbell, who teaches personal and family finance at the University of Central Arkansas.

Of students and grads who didn’t have a credit card of their own, just over half could identify the meaning of a credit card’s APR - and understood that paying on time was the most important factor in determining their credit score. Of students and grads who had their own credit card, three-fourths understood this basic credit information.

While it appears that having their own credit card increases the likeliness that students know important credit information, those numbers also point out that one fourth of our nation’s young credit card users are swiping their cards without understanding the most basic facts about credit.

"It's important for all young adults to recognize the impact the financial choices they make can have on their future and examine their financial habits with an eye toward saving for the future and building a strong credit history," said Shelley Solheim, director of financial education for Capital One.

Solheim said, "For parents whose children are graduating high school or college this year, graduation is an opportune time to have the conversation about how money management fits into their children's future plans."



Source:
Capital One Bank