Building Smart Borrowers

TalkingEDUSmall.jpgA sponsor supported content piece by Inceptia* in The Chronicle of Higher Education entitled “Building Smart Borrowers: How Loan Summaries can help uncomplicated student loans” suggests the results of a January 2016 survey by LendEDU** should be a cause of great concern to both schools and students managing student loan debt.


 Some of the results listed include:

  • 94% of student loan borrowers didn’t understand their loan repayment terms
  • 92% didn’t know the current interest rate on their loan
  • Nearly half of the respondents surveyed didn’t know how much money they borrowed initially
  • One quarter of student borrowers believed they didn’t have a federal loan when in actuality they did


It seems a lack of financial literacy compounded by the complexity of the loan process itself and the legally required counseling, “can cause cognitive overload.” In fact, “of 13,000 financial aid recipients polled, 41% reported (they had received) no form of loan counseling” at all.

Loan Summaries:

According to Inceptia, the answer to this problem is a loan summary otherwise known as a debt letter. This summary is a detailed depiction provided to students detailing monthly repayment amounts, current interest rate, etc. Student borrowers living in Nebraska, Indiana or Wisconsin where loan summaries are mandated already receive such a letter. Loan letters are also available to borrowers if their school has partnered with Inceptia’s Student Loan Knowledge HQ using Inceptia’s Loan Summary suite of default prevention tools.

So, even as New York State inches toward free four-year college, the need for most low and middle income students to borrow to pay for their education remains the reality. As long as this need to borrow remains, it is critical that students understand all the terms and conditions of their loan, and most specifically, those repayment terms.

To view the complete article click here.

To read Inceptia’s research brief “Loan Summaries: Nudging Students Toward Smart Borrowing” click here.

*Inceptia is a division of National Student Loan Program (NSLP), a nonprofit organization that provides expertise in higher education access, student loan repayment, analytics, default prevention, financial education and verification since 1986.

**LendEDU is a marketplace for private student loans and student loan refinancing.

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