Nine out of Ten Americans with Student Loans Fail’s Student Loan Quiz

More Than Half Unaware That Refinancing Could be an Option

SAN FRANCISCO--()--More than 44 million Americans have taken out student loans to help pay for college, but only a handful understand how their loans actually work, according to a student loan quiz sponsored by online consumer finance marketplace

The seven-question quiz surveyed 1,000 students and parents of students with loans on the basics of how student loans work and how rising interest rates could affect the cost of borrowing for college. Nine out of 10 people failed the quiz, answering less than 50 percent of the questions correctly. Sixty-three percent could only get one or two questions right.

“For students and families who plan to borrow for college, rising interest rates may translate into higher monthly student loan payments and thousands of dollars in additional total repayment costs after graduation,” said Credible founder and CEO Stephen Dash. “But for many borrowers, that could come as a surprise, because students typically take out loans one semester or one year at a time, and don’t start repaying them until they leave school. Once students hit their limits on more affordable federal loans, it's worthwhile to compare the rates offered by private lenders before turning to costly PLUS loans.”

With interest rates on the rise, students headed to college this fall could end up paying higher rates each year they take out loans. The good news is that once they’ve taken out a federal student loan, the rate is fixed for the life of the loan — a fact only 18 percent of students and parents polled by Credible knew at the time of the survey.

Other commonly missed questions on the quiz included:

  • Each year is different -- Only about half of students and parents (49 percent) knew that students aren't guaranteed to get the same rate on the federal student loans they take out each year they're enrolled in school.
  • Federal student loans reflect the government’s cost of borrowing -- Just a handful of respondents (4 percent) understood that rates on federal student loans issued to new borrowers are recalibrated annually, and tied to 10-year Treasury yields to reflect the government's cost of borrowing.
  • Federal PLUS loans have the highest rates -- Less than one in five students and parents (14 percent) knew that federal PLUS loans to parents and graduate students carry the highest interest rates of all federal loans.
  • Refinancing is an option -- More than half (53%) of students and parents surveyed did not know that they could lower the interest rate on an existing loan by refinancing it with a private lender. Borrowers who refinance federal student loans with a private lender give up some benefits, such as access to federal income-driven repayment programs that can provide loan forgiveness after 10, 20 or 25 years of payments.

Borrowing for College Growing More Expensive

On May 9th, the high yield on 10-year Treasury notes was 2.995 percent, which means that the rate for loans taken out starting July 1st for the upcoming school year will be 0.60 percentage points higher than last year. Over the last two years, the total increase in federal student loan rates is 1.29 percentage points.

So an undergraduate paying back the national average of $30,100 in student loan debt on the standard 10-year repayment plan would rack up $8,300 in interest charges at the 2018 rate for undergraduates (5.05 percent). That’s $2,240 more than if they’d been able to take out all their loans at the rate in effect for the fall of 2016 (3.76 percent).

Anyone curious to test their own student loan knowledge can take the quiz at

About Credible

As a marketplace that empowers consumers to discover financial products and services that are the best fit for their own, unique circumstance, Credible is fiercely independent and committed to delivering fair and unbiased solutions for millennials. Credible’s integrations with lenders and credit bureaus allow consumers to access actual rates through a neutral platform, without sharing their information until they’re ready to proceed with an offer. The platform provides an unrivaled customer experience, as reflected by hundreds of positive Trustpilot reviews and a TrustScore of 9.5/10. For more information, news media may email

Poll/quiz commissioned by Credible and conducted by Pollfish April 27, 2018.


Mike Jurs, 415-218-7978
Director, Communications & Content

Release Summary

44 million+ Americans have student loans, but only a handful understand how they work, according to a quiz.


Mike Jurs, 415-218-7978
Director, Communications & Content