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Abstract

Student loans comprise the primary source of financial aid funding for higher education. But how much do students know about the realities of loan indebtedness? This study evaluates data collected in winter 1996 from 443 graduating seniors at a Midwestem university. Its results diverge somewhat from those of some early studies, yet support other recent research. Many of the surveyed students were reportedly unaware of their total loan indebtedness and payment obligations (over- and underestimating debt payments); borrowed to support a "better lifestyle"; and were unable to estimate realistically their post-graduation earnings and ability to meet their repayment obligations. The results suggest a need for greater educating of prospective borrowers and the assumption of a "preventive posture" on the part of those involved in the lending process.

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