January 10, 2018
Getting a higher education in America continues to be highly expensive: The College Board reports that a moderate budget for an in-state public college for the 2017–2018 academic year averaged $25,290. A moderate budget at a private college averaged $50,900. And attending Harvard would cost over $65,000 this year, alone.
As a result, the student loan industry and the amount of outstanding student loan debt in the nation have grown in tandem—and the number of students who cannot find loans to cover their educational expenses is rising, as is the number of college dropouts.
According to data from LendEDU—a marketplace for student loans—today, there are over 45 million student borrowers in the United States who collectively owe more than $1.45 trillion in educational debt. In fact, the average student now owes $27,975 upon graduating—a sum that many will be paying back well into their thirties.
Where can a student obtain a loan for that much money? Federal student loans are quite accessible, but often cannot fully cover the cost of a college education. For that reason, many young Americans must turn to the private student loan market, a sector not as accommodating when it comes to distributing educational loans.
Private student loan lenders almost always require a consigner, according to LendEDU— and originate based on creditworthiness—while the federal government has relatively few requirements.
Indeed, LendU’s 2017 State of Private Student Loans study established that over 60% of private student loan applicants apply without a cosigner, yet only slightly fewer than 5% are approved.
Jeannie Tarkenton, CEO of FundingU—which describes itself as “a new kind of student lender”that does not require cosigners—explained,“Each year, about 2 million students apply to banks to attain critical ‘last gap’ loans to reach graduation. Those without co-signers are rejected, and poor/moderate income students are disproportionately represented in this rejected cohort.”
In a new poll of 569 current college students who submitted an application to Funding U for a non-consigned student loan, , LendEDU and FundingU found that many college students are having their dreams of graduating cut short due to a lack of funding. We thought it would be interesting to survey the population of college students who are applying for non-cosigned student loans to fill the gap between the cost of attendance and federal financial aid.
Overall, the poll found that the majority of college students applying for non-cosigned student loans were unable to find enough money to afford their college education during the 2017-2018 academic year.
Nearly 55% of the respondents answered “no” when asked if they had found enough funding for the 2017-2018 school year. Only 45% were successful in putting together enough money to afford their college education.
The plurality of respondents (51%) stated that they dropped out of college because of lack of funds, while about 40% had to reduce their hours to bring down cost. Another 9% of respondents had to transfer, likely to a more affordable institution.
According to the poll results, 53% of respondents said their intended graduation dates had been impacted by the fact that they were not able to put enough cash together to attend colleges or universities lucky enough to stay on track for their graduation timelines.
The authors of the study commented, “The results of this poll were surprising and particularly demoralizing because the respondent pool was made up of young Americans [who] were already in college and looking to continue their studies. Staying in a respective college or university based off of academic merits, alone, is already stressful enough, but imagine coupling the stress of achieving good grades with the struggle of finding enough cash to continue attending classes.”
Research contact: @mikebrownEDU