With the growth in student loans continuing to soar, politicians and borrowers struggling with an issue that’s become both a financial and political problem.

Presidential candidates are proposing to cancel student debt and make public college free, state legislators are cracking down on student-loan companies and, recently, government agencies have offered another approach — teaching students and borrowers more about finances.

The Treasury Department recommended earlier this month that colleges should require students to take financial-literacy courses and representatives from the Department of Education told a group of financial-aid professionals this week that the agency is planning to add robust financial literacy tools to the app students can use to apply for financial aid and manage their student loans.

“ ‘Is the problem people are making bad financial decisions or is it they simply don’t have enough money?’ ” — —Robert Kelchen a Seton Hall University professor who studies higher education finance

These proposals come after years of colleges across the country experimenting with ways to teach their students good financial habits and provide them with more information about their loans. The idea behind these efforts is to help students manage their finances while they’re in school and once they graduate.

Ultimately, it’s a laudable goal to help college students better understand their loans and their finances, but the question of how much to emphasize financial education underpins a broader debate about student debt, its causes, consequences — and possible solutions.

Robert Kelchen, a Seton Hall University professor who studies higher education finance, said lawmakers and experts often ask whether people are making bad financial decisions or if they simply don’t have enough money. “The answer is probably some of both — but it’s hard to tell how much is a literacy issue versus how much is a lack of money issue.”

Is providing students and families with more information enough to curb our nation’s $1.5 trillion student loan problem? So far, the research indicates that it’s probably not.

Here’s why:

What we often think of as financial literacy doesn’t match many people’s economic lives

Part of the challenge with using financial education to address the college-affordability and student-loan problem is that broadly, increases in financial literacy do little to change behavior, data show.

That has a lot to do with the disconnect between the curricula in most financial-literacy and education programs and people’s lived experience, said Timothy Ogden, the managing director of the Financial Access Initiative at New York University.

“ Low-income students with financial constraints may find themselves deciding between a high-interest payday loan or bouncing a check. ”

Much of what is taught and measured in traditional financial literacy and financial-education courses is how to evaluate relatively good choices through understanding concepts like interest rates or the difference between certain types of investment opportunities, he said.

But the consumers who deal with the most dire consequences from a poor financial decision — low-income Americans with financial constraints — typically aren’t facing these choices. Instead, they may be deciding between a high-interest payday loan or bouncing a check, Ogden said.

Part of the reason why financial education is irrelevant to so many Americans, he says, is because the curricula were developed during a time when most workers could count on a biweekly paycheck at a stable job. These days, more than 40% of Americans regularly see large swings in their income.

Very basic financial education concepts, like compound interest, “are based on a belief about a way income works — it starts low in your 20s and then steadily goes up over time,” Ogden said.

If that’s the economic trajectory of your life, then the typical advice — to stash away as much money as possible in retirement and other investment vehicles — makes sense, he said. But “if your income is bouncing up and down month to month and year to year it’s not clear at all that that’s the best way to manage your money.”

Even when students are provided with financial information that’s relevant to their lives, they’re still constrained by the cost of college

These days, some colleges are adapting to students’ financial realities and working to send them information that’s relevant at a time when it may be most useful.

For example, over the past several years more colleges have started sending student “debt letters,” which provide students with information like how much they’ve already borrowed, their future monthly payments and other personalized information about their loans. But the data on these programs so far indicates that they’re not doing much to change students’ borrowing behavior.

“ ‘Students are making financing decisions based on the prices and the constraints they face.’ ” — —Drew M. Anderson, an associate economist at the RAND Corporation

“Students are making financing decisions based on the prices and the constraints they face,” said Drew M. Anderson, an associate economist at the RAND Corporation. A lack of information about student debt isn’t necessarily the problem. In fact, Anderson’s research shows that students with loans actually understand them the best.

And for some students, the “right” financial decision is actually to borrow more. It’s not uncommon for students to need loans in order to complete school and/or avoid working so much that it interferes with their progress. In other words, requiring students to learn more about their debt may do little to change the overall balance of outstanding student loans, Anderson said.

“When the federal student-loan borrowing decision is discussed sometimes it’s discussed as you either take on the loan or you don’t — and everything else is the same,” said Lesley Turner, an economist at Vanderbilt University who has studied education financing decisions. “In the current structure of grants and loans and college costs, the trade off is, ‘Do I finance these costs through a federal loan? Or do I finance them with another option?’”

Colleges, the government and companies make the system for paying for college and repaying loans confusing

Trying to determine the cost of a given college and what tools are available to foot the bill can be a formidable challenge for students and families. That’s because financial-aid offer letters — telling prospective students how much they’re expected to pay and whether they qualify for any grants and loans — are often confusing.

In some cases, colleges do little to differentiate between scholarships, loans and work-study in these letters, according to a report released last year by New America, a think tank. In other cases, they describe loans parents can use to finance their children’s education as “awards.” And those are just some of the examples of terminology that could cause confusion, New America found.

“ Some financial-aid offer letters describe loans parents can use to finance their children’s education as ‘awards.’ That obviously can cause confusion. ”

How colleges package such information does influence students’ and families’ approach to financing college. Research from Turner and her co-author found that community-college students who received a financial-aid letter where loans were included as part of the package were more likely to borrow than those who received no loan offer in their financial-aid letter, but were told via email other communications that they qualified for student loans.

“The design of the award letter, the way loans are presented, the way the information is delivered right at this point in time can be really important,” Turner said.

What’s more, her research also suggests that more information isn’t always better. Turner and her co-author compared students who received more context surrounding their borrowing decision to those who didn’t. The found that students with more information were more likely to punt on whether and how much to borrow for college.

“ Federal student-loan borrowers have access to a suite of programs to manage their debt, but the high number of repayment plans can make it arduous. ”

“It was a cautionary finding for us — you have to be very careful with interventions that are supposed to provide information,” she said. “We think it overwhelmed students.”

Deciding how much to borrow isn’t the only opaque part of the student loan process: Repaying debt can be confusing too. Federal student-loan borrowers have access to a suite of programs that allow them to manage their debt, but the high number of student-loan repayment plans can make it difficult for borrowers to determine their best option.

In addition, because borrowers have to re-certify their income from year-to-year to stay enrolled, they’re regularly at risk of being kicked out of their payment plan and bumped to a higher monthly payment amount.

“A different way to approach it would be to make the income-based repayment system simpler so people need less financial education up front,” Anderson said.

Company malfeasance is a factor in students’ and borrowers’ challenges

Consumer advocates have complained for years that the student-loan companies hired by the government to work with borrowers are making it more difficult than necessary for borrowers to access the debt-management tools they’re entitled to under the law. No amount of budgeting advice or tools comparing college costs is enough to help borrowers overcome those challenges, these advocates say.

When Seth Frotman read complaints from student-loan borrowers during his time as the student-loan ombudsman at the Consumer Financial Protection Bureau, he said he observed said most students were responsible and took accountability for their debt: “This wasn’t people who had made bad decisions, it wasn’t people who were trying to walk away from their loans.”

“ Students are at risk of signing up for colleges run as for-profit businesses that research has indicated have poor graduation and job placement outcomes. ”

In fact, some complaints came from borrowers who were trying to be responsible and put more than the minimum payment towards their student loan and struggling to convince their student loan company to apply the extra money in the way that was most favorable to them.

“These were tens of thousands of people who were desperately trying to pay their debt stymied at every opportunity by private sector companies,” Frotman said.

In addition, when students are deciding where to attend, they’re at risk of signing up for colleges run as for-profit businesses that research has indicated have poor graduation and job placement outcomes and often require students to borrow more than average.

Banning these schools from the federal financial-aid program would be a major step in the right direction for those concerned about the challenge of student debt, Ogden said.

“You’re going to get massively more benefit from just that one regulatory decision than investing $3 billion for financial education,” he said.

Information can be helpful, but mandatory financial-literacy classes may not be the right answer

There are other, broader benefits to providing students with personalized financial guidance at the right time.

“Part of the experience in college is to help these people — that are going to get these degrees and graduate — become good citizens of the world,” said Phil Schuman, the senior director of financial literacy at Indiana University. “This is just another one of those life skills that they have access to.”

“ The school and peer counselors can be a better source of information for students looking to manage their finances than, say, parents or other mentors. ”

At Indiana University, Schuman has been pioneering this type of programming. IU began sending students a debt letter in 2012. In addition, the school has a robust peer counseling program around finances and launched an online tool in 2017 that students can use to determine the impact of different financial decisions, such as the frequency of vacations or trips home or bringing a car to campus.

These programs are part of a broader initiative at the school called Affordability at IU, which also includes efforts to make tuition more standardized and predictable and guarantees that — if students follow an outlined degree path can’t access a required course to complete their degree on time — they’re entitled to that course for free in a future semester. These efforts have reduced students’ overall debt burden by 19% since 2012, according to Indiana University.

Schuman said he thinks of these initiatives as part of a two-way street of financial responsibility in college. On the one hand, colleges need to do what they can to drive down costs, he said. At the same time, students should be gathering as much information as they can about how to make the experience affordable for them.

“ ‘The reality is those part-time jobs, they don’t pay for school anymore, they pay for part of it.’ ” — – Phil Schuman, senior director of financial literacy at Indiana University

In addition, the school and more specifically peer counselors, can sometimes be a better source of information for students looking to manage their finances, than say parents or other mentors, because they have a more accurate understanding of the financial constraints today’s students face, Schuman said.

“We hear it on repeat all the time, all of these older generations say, ‘When I was in college, I had a part-time job and worked my way through school,’” Schuman said. “The reality is those part-time jobs, they don’t pay for school anymore, they pay for part of it.”

It’s hard to argue that these types of efforts to arm students with more information about how to manage their finances in college and beyond are a bad idea. But making financial education mandatory comes with a cost — particularly if it can hold students up from making progress towards their degree, Anderson said.

“The college student population is a really broad swath of Americans who aren’t just people right out of high school — they have other things on their plate often times,” he said. “Researchers and practitioners and educators want to find good ways to inform students, but there’s just so many ways it can go wrong.”