For many, the choice to pursue a college degree is motivated by the belief that holding a postsecondary degree or credential assures a brighter future. But for students who must borrow to make college possible, the anticipation of debt and repayment is enough to make one second guess if earning a degree is a wise investment.

A report from New America’s Education Policy Program analyzes what prospective college students feel is reasonable to borrow, how much they expect to borrow and their expected methods of loan repayment.

According to the report, the average amount students expected to borrow for school was $25,295. At current interest rates its would only cost $260 per month to pay off this debt on a standard ten-year repayment plan. However, students expected to have an average monthly payment of $545 — more than twice as much as what they are likely to pay. The gap between the two figures suggests students tend to over exaggerate the financial impact of using loans to pay for college.

“Students struggle to understand exactly how student loan repayment is structured compared to how much they’re borrowing,” said Rachel Fishman, senior policy analyst for New America and the report’s lead author.

Students are also less aware of the repayment options available that could make the monthly repayment rate more reasonable.

When asked how they planned to repay their loans, the most popular response from students was that they planned to make a budget (65%). Only 22% of students said they would explore income-based options that could drive down the monthly cost, such as Income-Based Repayment and Pay as You Earn. Because relatively few students are aware of the different loan repayment options that exist, the report author recommend such options be simplified.

To address these and other issues, the report offers recommendations to improve students’ understanding of the loan borrowing and repayment process:

Award students a cumulative financial aid package. Students are currently determining their college costs and the amount of aid they expect to receive on a year-by-year basis as they complete the FAFSA annually. If students were awarded a financial aid package based on several years of previous income that would show them how much aid they can expect to receive over the course of their degree.

Inform students of the amount of debt they owe annually. Institutions should notify students of how much debt they have accumulated on a yearly basis. “If colleges communicated price and loan totals this way, students could keep up with what they paid for college, how much financial aid they’ve received, and how much debt they have,” said Rachel Fishman the report’s lead author.

Improve Entrance Loan Counseling. Loan counseling can be improved if students are provided more information front-end information on how loan repayment works. By providing students with information on repayment options and an update of how much debt they have accumulated each time they take out new loans, students can get a better idea of how they can best manage loan repayment in the future.

Make the U.S Department of Educations Financial Awareness Counseling Mandatory. The U.S Department of Education has a Financial Awareness Counseling tool that will help students can create a budget and explore repayment options. Mandating this counseling could help keep students informed about how much they are borrowing.

Simplify the repayment options available. Simplifying repayment options will ease the confusion and frustration associated with loan repayment and make it easier for counselors and educators to communicate the variety of repayment options available to students. The report suggests narrowing loan repayment to three simple options: adjustable income based repayment, a ten-year plan, and a consolidation option.

The report is the fourth of a series released throughout the summer as part of the 2015 College Decisions Survey, which studied how all prospective students (regardless of age at the time of enrollment) engage with the degree-seeking and financing process. The final report focuses on how and where students get their information about different colleges and what resources they find helpful.

Read the full report here.

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