Many millennials don't know what they owe on their student loans, what interest rate they are paying or whether college was worth it, according to a survey released Thursday by Citizens Bank.
A startling 6 in 10 millennials said they have no idea when their loans will be paid off and more than a third don't even know the interest rate they are paying. On average, graduates owed about $41,000 in student loans, the report said.
"It is very uncommon for consumers to have such a large amount of debt and yet not know their interest rate or how long their payments are going to last," said Brendan Coughlin, president of consumer lending at Providence, Rhode-Island-based Citizens Bank, which surveyed over 500 college graduates ages 18 to 35 with student loans.
Many graduates expressed buyer's remorse regarding their education, according to the study. Fifty-seven percent said they regret taking out as many loans as they did, and 36 percent said they would not have gone to college if they fully understood the associated costs.
And 90 percent of students feel they do not have all the information necessary to pay off their college loans, according to another survey of nearly 90,000 college students across the country. This survey was conducted by EverFi and sponsored by Higher One, which provides financial support services to college and universities and their students.
"Students who use loans to pay for college must also be educated about the responsibility to pay off college loans and have a better understanding of repayment options," said Mary Johnson, vice president of financial literacy and student aid policy at Higher One. "For those that choose to go to an expensive university, they need to have eyes wide open."
Said Coughlin: "There's also a general lack of recognition that there are options when they get out."
Yet that is when the debt burden weighs on every aspect of their life. As a result of their financial obligations, nearly half of millennials said it prompted them to delay buying a house, according to a TD Ameritrade survey released last year of 1,000 adults age 18 and older. About 29 percent said they were putting off getting married and 38 percent said they postponed having children.
"You don't have to take all of the loans being offered," Johnson said. "If you can reduce the amount of loans for incidentals, it can make a huge difference in your overall debt when you graduate."
Once you've graduated, start by going to the Department of Education's website at studentloans.gov to get a better handle on repayment options and terms for federal student loans.
Then begin an automatic repayment program or, if you cannot afford those payments, look into federal income-based repayment programs, which allow you to pay a percentage of your income rather than a flat rate, as long as you are under a certain income threshold.
After you have landed a steady job and established a credit history, call a few lenders or talk to a financial advisor about your options, Coughlin said.
If you have a private loan or unsubsidized federal loan, you may be able to refinance your loan at a lower interest rate. Many online lenders that refinance student loans, like LendKey and CommonBond, have competitive rates and terms that can let borrowers lower their monthly payments and improve their cash flow.
But weigh the options first, said CommonBond's chief marketing officer Phil DeGisi. Refinancing to a private loan will forgo the safety nets that come with a federal loan, including the income-based repayment programs and loan forgiveness, for those who would qualify.