Despite the fact that more than 44 million Americans have student loans and their debt now totals $1.4 trillion, many people remain unclear as to how, exactly, those loans work. Financial website Credible created a six question quiz to "gauge public awareness of how rising interest rates might affect the cost of borrowing for college." The quiz surveyed 1,000 students and parents on how interest rates are set, how often those rates are adjusted and whether or not they can change.
A shocking number of them failed.
"More than 9 out of 10 people scored less than 50 percent," Mike Jurs, Credible's director of communications and content, tells CNBC Make It, and 63 percent could answer only one or two questions right. No one was able to answer all seven questions correctly and one in five respondents couldn't guess even a single right answer.
"There's clearly a need for more information about how federal student loans work!" says Jurs.