92% would change college financial choices if given second chance

By Jenny Twomey | Published on March 9, 2026

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As a school year ends with a new one on the horizon, many students and recent graduates find themselves navigating a complex financial landscape without adequate preparation. Financial literacy is most often not taught in schools. Every day, students tell us the challenges they face regarding financial literacy and managing student loan debt.

Alarmingly, a majority of recent college graduates reported lacking basic money management skills while simultaneously carrying an average student loan debt of $40,000. This combination creates a significant hurdle, leaving many uncertain about where to begin their journey toward financial stability.

In fact, in a recent survey, we found that:

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Recent grads high in student loan debt, low in financial literacy

Despite recognizing the importance of financial literacy, few receive formal education on it. Most are just winging it, trying to figure it out as they go. A staggering 80% of students say they lacked sufficient financial knowledge when taking out student loans. Recent grads find themselves high in student loan debt but low in financial literacy, creating a precarious situation as they navigate their post-college lives.

The consequences are clear:

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This debt-literacy gap is profoundly shaping young adults’ financial futures.

Financial jargon feels like a foreign language

Another major roadblock? All the confusing money terminology. Budgets, interest rates, credit scores – it’s like a foreign language to most when starting out. This confusion extends to student loan repayment, where recent graduates struggle to grasp key concepts fully.

Earnest’s survey reveals the depth of this confusion:

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Only 43% feel confident explaining interest rates. Barely a quarter understand refinancing or different repayment options. Just 23% could explain the exact amount they owe and why. And a mere 21% are clear on when they’ll begin making payments.

It’s no wonder students feel lost. They’re expected to automatically know how to budget, save, invest, and juggle an average of $40,000 in student debt post-graduation. It’s like being handed a 500-piece puzzle with no picture on the box.

Take Ellie’s story, for example. She graduated with $60,000 in federal loan debt. Despite being financially responsible – working, budgeting, and paying extra on loans – her balance barely decreased. After investigating, she realized it would take decades to pay off. By refinancing with Earnest ¹, she reduced her interest rate by 4%. Later, with a better job, she refinanced again. Prioritizing financial freedom while still enjoying life, Ellie managed to pay off her loans in just 7 years

*Individual results vary. Example only.

Filling the financial literacy gap: How online platforms are reshaping financial education

When it comes to understanding the cost of college, traditional education is falling short, and students are turning to alternative sources. The glaring need for practical financial skills, especially regarding college costs, has led many to an unexpected classroom: social media.

Marsha Barnes of the Finance Bar summarizes the role social media influencers like herself play in helping to close the gap:

“ Financial literacy is essential for understanding the implications of student loans and preparing for the future financially. As someone who can personally relate to the 91% of recent college graduates who believe a financial literacy class would have been more valuable than other courses they took, I am reminded that having the tools to apply mindfulness to decision-making helps us be more intentional about our next steps personally and professionally.”

Nearly eight in 10 young adults report getting financial advice from social media, highlighting the pressing need for accessible information. This trend underscores why it’s vital for loan companies to step up and educate borrowers. With only 23% of students feeling confident they can explain their loan details, there’s a clear opportunity for lenders to empower borrowers, rather than exploit their lack of knowledge. Responsible lenders can differentiate themselves by prioritizing transparency and education over complex terms and hidden fees.

Companies can fill this knowledge gap by providing comprehensive education and personalized 1:1 support throughout the loan process. By offering dedicated human help, they can guide borrowers step-by-step, answer specific questions, and ensure individuals make informed decisions tailored to their unique financial situations. This personalized approach can significantly reduce future financial stress and empower borrowers to navigate the complexities of loans with confidence.

The Earnest difference: Empowering informed financial decisions

The finding that 80% of graduates lacked sufficient financial knowledge when taking out student loans underscores why we’re passionate about what we do. At Earnest, we believe in more than just lending – we’re committed to fostering successful financial outcomes. Our approach is rooted in the principle that private student loans should be a last resort, only considered after exhausting federal loans, scholarships, and grants.

If you’re among the many struggling to navigate budgets and student loans – from paying for college to managing loan debt – Earnest is here to help. Our commitment goes beyond just lending; we’re dedicated to addressing the financial literacy gap revealed in our survey.

Our offering goes beyond some of the lowest rates and no fees – we provide a 9-month grace period ², flexible payments, and full cost transparency. What truly sets us apart is our team of specialists, ready to help you build a personalized financial plan with wait times under 2 minutes and a 94% satisfaction rating. Check your eligibility in just minutes and experience the Earnest difference – where informed decisions meet long-term financial goals.

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About the Author

Jenny Twomey

Jenny Twomey is the community communications lead at Earnest. During her 9 years with Earnest she has also worked in client happiness and scholarship program management.

Her finance career began in personal banking in 2008, where she recognized the widespread need for financial literacy education. As a Colombian immigrant who faced challenges navigating higher education in the US, Jenny is passionate about empowering others to achieve financial independence through knowledge and resources.