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Fidelity's Survey of Recent College Graduates

By Marc Hendel, Senior Researcher and Data Analysis Manager

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During two weeks in April 2013, Fidelity Investments used a well-known organization to survey 750 recent college graduates (352 respondents were about to graduate in 2013 and 398 graduated in 2011 and 2012). The purpose of the "Cost-Conscious College Graduates Study" was to assess the effects of student loan debt on choices made during college and its influence on future financial planning. Although no direct statement about the randomness of the survey sample was made in the summary released by Fidelity, a statement in the report indicates that the results may not be applicable to the population represented by the sample; a nonrandom sample is assumed. Nonetheless, the results reveal some realizations that are in line with sound financial advice being highlighted by various student advocate groups.

Surprised by Debt

Approximately 50% of respondents from the class of 2013 indicated that they were surprised by how much debt they had accumulated. In line with other national statistics, approximately 70% of the respondents from the class of 2013 have some debt when they graduate. The amount of reported debt, however, was much higher than most national figures, averaging approximately $35,200. The reason for the higher debt is that respondents were asked to include federal, state and private loans, as well as debt owed to family for college costs and credit card debt acquired during college. This view of debt upon graduation may be more realistic than the typical view of only student loans in the name of the student. The following table shows a breakdown of that debt for the class of 2013 respondents by category.

Type of Debt Average Debt % with Debt
Government Loans $26,000 56%
Private Loans $19,000 22%
State Loans $18,000 12%
Personal/Family Loans $13,000 23%
Credit Cards $3,000 25%
Average of All Debt $35,200 70%

Different Choices

Within the group of respondents from the class of 2013, two retrospective results are salient and related to advice supported by recent reports by Anthony Carnevale, Iowa Student Loan (through Student Loan Game PlanSM) and others. First, 39% of respondents from the most recent graduating class indicated that they would have made different choices related to college expenses if they had fully understood the total cost of college. This is up from 25% reported in the 2011 version of this survey. The literature is full of examples of how to cut expenses while attaining a postsecondary education, but specific examples culled from this survey's results include:

  • 52% would have researched more grants/scholarships.
  • 48% would have started saving earlier.
  • 42% would have found more ways to save and control costs while in school.
  • 24% would have opened a dedicated college savings account.
  • 23% would have better researched and understood financial aid and the implications of taking on student debt.

In addition, 57% of 2013 graduates think they could have saved more for college. Further questioning of this subgroup revealed that:

  • 69% say they could have cut back on entertainment/eating out.
  • 64% say they could have cut back on retail spending.
  • 54% say they could have saved more from a summer job during high school.
  • 47% say they could have saved more from an after-school job during high school.
  • 43% say they could have used gifts such as birthday and graduation money.

The second related result is that 59% of 2013 graduates report that they chose a specific major based on the expected future salary associated with that major. Several recent reports tout the benefits of considering future starting salary for a selected major to help understand how much to borrow for college.

Date: July 2013

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