Millennials Have No Idea How Their Student Loans Work

If you're a recent college grad with student loan debt, chances are you have no idea when you'll have your loans paid off—or how much you're paying in interest for that undergraduate degree.

That's the takeaway from a new survey from Citizens Bank, which found that nearly six in 10 millennials report underestimating their monthly payments, 45% do not know how much of their annual salary they spend on their loans, and more than one-third don't even know what their interest rate is. A full 44% of graduates don’t understand the difference between federal and private loans.

The survey of 501 millennial college graduates with student loans was conducted in February. One of the most eye-opening statistics from the study was that 36% of respondents said they would have rethought attending college if they knew the costs associated with it from the get-go.

"All of those stats center on the fact that when undergraduates are getting into school, it's a very emotional thing, higher education is still a part of the American Dream, but not enough diligence is done up front," says Brendan Coughlin, president of Consumer Lending at Citizens Bank. "They end up not understanding the magnitude of the decisions they made when they're 18 years old."

Millennial graduates report they spend 18% of their annual salary on student loan payments, and yet a large percentage can't even state what their interest rate is. There were also huge discrepancies between men and women when it came to loan knowledge: 42% of millennial women do not know the average interest rate on their student loans compared to 31% of men. "I can't think of any other consumer debt where that number of folks do not know what their interest rate is and how long they're paying it," he says. "If you have a mortgage, you would almost to a person know your interest rate and how long you're paying it."

And when it comes to student loan repayment, ignorance certainly isn't bliss. Coughlin put a particularly scary number on Gen Y's student loan blind spot: According to Citizens Bank, of the $1.3 trillion in student loan debt, approximately $400 billion of that is refinanceable. Yet one third of graduates don't know that refinancing is even an option, and over 75% say they don't plan to refinance at all.

"That's a huge number," Coughlin says. "There are so many of these recent graduates that are sitting on the sidelines struggling, and have not yet cashed in on the savings that they're entitled to."

Does refinancing sound like a big headache? According to Coughlin, all it takes is five minutes to apply for a better interest rate—and it's usually free.

"Just pick up the phone and call one of the lenders," he says. "You may decide it's not for you, but it's a free conversation and you're going to get more educated about your options. You may find that you're sitting on a ton of money."

Curious how much you could save? Here's how to find out.