The ceremonial tossing of college-graduation caps into the air was once a symbol of liberation. Now, it often signifies a future tethered to massive student debt, which takes a borrower 14 years on average to repay. Most recent graduates struggle to escape its wrath; after all, student debt in the United States now amounts to $1.16 trillion, $31 billion more than it was last year. America’s own president didn't manage to pay off his loans until a few years before he took office.
The Internet has, naturally, become a reservoir of information on the topic. A Google search for "college loan debt" yields roughly 21 million results. In that haystack, resources range from loan-repayment calculators that give students a timeframe for repayment to "how to" listicles extolling financial advice. Personal narratives of miserly post-college living are nestled in the self-help results, too. Indeed, studies show that student debt can even take a toll on one’s physical and mental health.
So, why did prospective college students, according to new estimates, turn down nearly $3 billion in free federal-aid money last year? The answer appears to be two-fold: the red tape of the financial-aid process and the widespread financial illiteracy plaguing the nation.
Unclaimed Federal Aid Money by State, 2013-2014
The $3 billion figure is according to the online financial resource NerdWallet. Its researchers took the number of graduating high-school seniors who, during the 2013-14 application cycle, failed to fill out the FAFSA (the Free Application for Federal Student Aid), and multiplied figure that by the average amount of need-based Pell Grant money that was disbursed among the year’s grant recipients.