As more and more students enroll in college, and the costs of tuition keep rising, student debt has become a national concern. Total student debt in the country has surpassed $1.2 trillion, and the average debt burden for students who graduated in 2014 is $33,000. Student loans are viewed as a necessary evil by most. Taking out loans can help students get through college and land a decent paying job. However, many graduates express regret or frustration with their choices, especially if they can’t find a job that helps them pay off their loans.

A recent study from the Brown Center on Education Policy at Brookings suggests that most students have a poor understanding of the financial aid and federal loan process. They found that about half of their survey respondents underestimate the amount of debt they have, and some students have taken out loans they aren't even aware of! Of students who had federal loans, 28% reported having no federal debt and 14% thought they did not have any debt at all.

…about half of all first-year students in the U.S. seriously underestimate how much student debt they have, and less than one-third provide an accurate estimate within a reasonable margin of error. The remaining quarter of students overestimate their level of federal debt. Lastly, we find that among students with federal loans, 28 percent reported having no federal debt and 14 percent said they didn't have any student debt at all.

What is it about the financial aid and loan application process that is so confusing or overwhelming that over one fourth of students with federal loans don’t even know that they have these loans? This could spell a serious problem in the coming years as graduates get surprised with higher loan bills than they thought. Students need an accurate understanding of the prices they are paying and the aid they are receiving so they can better plan their time in college as well as how to pay off loans after they graduate.

In 2014 70% of students graduated with some amount of loans and were the most indebted graduates ever, with more than double the amount of loans their parents had to pay off. A college degree still proves a valuable investment for most, but more and more families are questioning the value of a degree that comes with a huge debt burden. While it makes sense for some students to go into debt for a future high-paying career, students with degrees in low-paying fields do not see the same return on investment. Below average students, or drop-outs also pay a high price for their college education, and are unlikely to see many financial benefits from their time in college.

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