The findings of a Brookings Institution study “suggest that a significant share of undergraduate students do not understand how much they are paying for college or how much debt they are taking on”.
Students who do not have a good idea of their level of borrowing may make expensive mistakes that they will later come to regret. They are also likely to be surprised or even fearful when their first loan payments come due, which may impose an emotional burden on borrowers. More broadly, it may perpetuate popular narratives about crushing student loan burdens, which could discourage promising students from pursuing a college education.
We tend to think that college students are smart, but findings like these certainly put that belief in doubt.