My study, utilizing data from National Financial Capability study (2021)(n=753) and a self-conducted survey of 172 seniors presented at Greater Kansas City Science and Engineering fair, 2026 in the Behavioral and Social Sciences category. (Won 1st place in the division)
ABSTRACT
Student loan debt has become one of the largest categories of consumer debt in the United States, surpassing both credit card and auto loan debt. Many young borrowers enter into student loan agreements without a full understanding of key loan terms or the long-term financial consequences of their borrowing decisions Understanding the knowledge gap surrounding student loan repayment among young borrowers is critical in the context of rising student debt in United States. This research addresses whether current educational and familial factors improve financial knowledge and decision-making.
A two-phase methodology was used. Phase 1 analyzed data from the 2021 National Financial Capability Study, focusing on individuals aged 18–24 with student loans. Phase 2 consisted of an original survey administered to 172 high school seniors planning to borrow for college. Financial literacy was measured using the “Big Five” questions, along with a student loan repayment knowledge assessment and behaviors of estimating future monthly payments and income.
High school financial education significantly improved general financial literacy scores. However, it did not translate to financial behaviors (pre-loan assessment: assessing potential income of future occupation and monthly payments) and had no impact on student loan repayment knowledge. In contrast, parental education at the college level or higher had a positive impact on loan-related decision-making and is associated with stronger loan repayment knowledge. Welch's t test and Two-proportion z test were used for statistical analysis.
Absence of both support measures (financial literacy and college educated parent/guardian) led to worst measures. These results highlight the need for more targeted, loan-specific financial education, particularly for first-generation students.
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