Borrowing Begins Long Before the First Loan

Author: Raquel Bermejo, Ed.D., Director of Thought Leadership, Encoura

Emma has wanted to be a music teacher since elementary school. She still talks about the teacher who handed her a guitar in the fourth grade and changed the course of her life. She’s spent years practicing, performing, volunteering with younger students, and dreaming about standing in front of her own classroom one day. She found the perfect college. The music education program is outstanding. She felt at home the moment she stepped on campus. She can already picture herself rehearsing with the university jazz band and student teaching in local schools.

Then one evening, she sits around the kitchen table with her parents. The financial aid estimate has arrived, and the excitement quickly turns into silence. “How much would we have to borrow?” “Can a music teacher afford to pay that back?” “Will you still be able to buy a house someday?” “Are we asking you to start your career already buried in debt?” No one at the table knows the answers. Not because those answers don’t exist. Because no one has helped them understand them. Quietly, the family crosses the college off the list, and Emma’s heart is a little broken.

They are ruling that college out, not because they know borrowing would be a mistake, but because they’re afraid it might be.

That scene is playing out in homes across the country every day. Encoura’s research shows that borrowing has become one of the earliest and least understood factors shaping college choice (2026 Perceptions of College Financing). Yet the uncertainty families feel before enrollment often follows students well into adulthood. Gallup and Lumina Foundation (2026) found that 82% of graduates with student loans worry about repayment, and more than half say their debt has delayed major life decisions, including buying a home, saving for retirement, or starting a family.

The question isn’t whether families are worried. The question is whether colleges are giving them the information they need to make confident decisions before fear makes the decision for them.

BORROWING IS CHANGING COLLEGE CHOICE

Our national survey of more than 2,300 college-bound 11^th and 12^th graders found that borrowing has become one of the earliest filters in the college search, not after students enroll, but while they are deciding where to apply.

Among prospective students:

• 60% ruled out at least one college because they expected they would need to borrow too much.
• Nearly three-quarters reported anxiety about taking out student loans.
• 74% said they would be interested in a Loan Repayment Assistance Program (LRAP) if one were available.
• Students consistently asked for more information about repayment, monthly payments, and long-term financial outcomes, not simply more explanations of financial aid.

These findings tell us something important. Families and their students are not necessarily rejecting borrowing; they’re rejecting uncertainty. They don’t know what is reasonable to borrow. They don’t know what the monthly repayment will look like. And they don’t know what protections exist if life doesn’t go according to plan. When uncertainty becomes overwhelming, the safest decision often becomes the easiest one: don’t apply, apply somewhere less expensive, or stay closer to home… or postpone college altogether.

Ironically, Gallup and Lumina Foundation (2026) suggest those fears are not entirely unfounded. Graduates who borrowed frequently reported delaying homeownership, retirement savings, graduate school, and other major life milestones because of student debt. Families may not know exactly what borrowing will mean, but they know it matters. These decisions are happening months before financial aid offices ever have a chance to help.

COLLEGES ARE COMMUNICATING … BUT ARE THEY?

The encouraging news is that institutions recognize borrowing matters. Encoura’s research on institutional financial aid communication found that nearly every institution reports that they provide information about student loans and responsible borrowing during the enrollment process (2026 Affordability & Financial Aid Communication Practices).

The challenge is not whether colleges communicate. The challenge is what they communicate.

Encoura’s institutional research found that:

• Nearly all institutions provide borrowing information.
• Only a small share helps families estimate total debt at graduation.
• Even fewer provide realistic monthly repayment projections before enrollment.
• Borrowing conversations often occur alongside the financial aid award letter, after many families have already eliminated institutions from consideration.

In other words, institutions are answering the question: “How do student loans work?” Families are asking a different question: “Will borrowing this money be okay for my child?” Those are not the same conversation.

High school counselors see this confusion every day. In Encoura’s 2026 High School Counselor Study, counselors identified financial aid and affordability as one of the greatest challenges families face during the college search, underscoring that many parents arrive at the application process without the information they need to make confident decisions.

EDUCATING STUDENTS ABOUT BORROWING SHOULD BEGIN BEFORE THE AWARD LETTER

Families don’t need another glossary of financial aid terms; they need context.

Imagine if every prospective family learned:

• how much students in similar majors typically borrow
• what monthly payments look like under different borrowing amounts
• how income-driven repayment plans change monthly costs
• what Loan Repayment Assistance Programs (LRAPs) do

These conversations build confidence, and confidence reduces uncertainty; reduced uncertainty changes behavior.

Just as important, they prepare families for reality. Gallup and Lumina Foundation (2026) found that graduates overwhelmingly continue to believe that college was worth it, even as they worry about repayment. Helping families understand both the opportunities and responsibilities of borrowing before enrollment allows them to make decisions based on evidence rather than fear.

FIVE WAYS INSTITUTIONS CAN IMPROVE BORROWING EDUCATION

1. Start earlier. Borrowing education shouldn’t begin with the financial aid award letter. Introduce borrowing concepts during recruitment, campus visits, junior-year communications, and family events.
2. Talk about repayment, not just loans. Families care far more about monthly payments than interest rates. Show realistic repayment scenarios using actual borrowing examples tied to different majors and career paths.
3. Connect borrowing to outcomes. Help families understand borrowing within the context of graduation rates, career placement, starting salaries, and long-term return on investment. For Emma’s family, the question isn’t simply, “Can she become a music teacher?” It’s “Can she become a music teacher and comfortably manage the amount she needs to borrow?” Those are very different conversations, and institutions are uniquely positioned to address the second. Borrowing only makes sense when viewed alongside the value it creates.
4. Explain risk-reduction strategies. Many families have never heard of income-driven repayment plans, Public Service Loan Forgiveness, employer repayment benefits, or Loan Repayment Assistance Programs. These programs dramatically change the borrowing conversation, but only if families know they exist before making enrollment decisions.
5. Make borrowing education a family conversation. Parents and guardians remain among the most influential voices in college decision-making. Provide resources specifically designed for families, not just students. Plain-language guides, repayment calculators, webinars, short videos, FAQs, and real-world borrowing examples can transform confusion into confidence.

IMAGINE A DIFFERENT FAMILY EXPERIENCE

Imagine Emma’s family sitting around that same kitchen table. The financial aid estimate still arrives. Borrowing is still part of the conversation. But this time, they already understand what music education graduates from this institution typically borrow, what monthly payments might look like, what repayment options are available to teachers, and how those payments compare to expected earnings. They’re no longer making a decision based on fear. They’re making one based on information.

Instead of assuming debt will limit every future opportunity, they know the available repayment options, understand the institution’s outcomes, and recognize how borrowing aligns with their student’s intended career. Instead of crossing a dream college off the list because the sticker price feels overwhelming, they make a decision based on clear information, realistic expectations, and confidence.

That is a very different enrollment experience. And it is one institutions have the power to create. Borrowing education is not simply about explaining how loans work or defining financial aid terminology.

It is about helping families make one of the most important financial decisions of their lives with clarity, not fear.

When institutions move beyond loan information and toward borrowing education, they don’t just improve financial literacy. They improve college access, strengthen family confidence, and help more students say yes to opportunities they might otherwise have believed were out of reach.

APA REFERENCES

Encoura, Ardeo Education Solutions, & NextGrad. (2026). 2026 Perceptions of College Financing. To be released in September of 2026.

Encoura. (2026). 2026 Affordability & Financial Aid Communication Practices. Encoura. High School Counselor Marketing, & NextGrad. (2026). 2026 High School Counselor Study. Download the full report here.

Gallup, & Lumina Foundation. (2026). The State of Higher Education 2026: Valued but Out of Reach.