Debt and Graduation from American Universities

Abstract

The goal of "college-for-all" in the United States has been pursued in an environment of rising tuition, stagnant grant aid, and already strapped family budgets with the gap filled by college loans. College students are thus facing increasing levels of debt as they seek to develop their human capital and improve their career options. Debt is a useful resource for making needed investments. It is unique as a resource, however, because it must be repaid and can thus also increase vulnerabilities and limit options. We find that lower levels of educational debt do support college completion. However, additional educational debt beyond about $10,000 actually reduces the likelihood of college completion compared to lower levels of debt as the burden of repayment looms. Graduation likelihoods for students from the bottom 75% of the income distribution at public universities are especially influenced by debtincluding the negative effects of taking on additional debt beyond $10,000. The article concludes with a consideration of how the macro-level changes in financing societal functions influence the individual-level risks and vulnerabilities of life in a debt-based society.

Creating a Culture of Student Philanthropy to Address Financial Challenges in Universities

“…Developing a culture of philanthropy among students and faculty while students are still in school can be beneficial to the social work institution in ways above and beyond financial support. Increased availability of scholarships to defray the cost of graduate education can improve retention of current students (Dwyer, Hodson, & McCloud, 2012) and potentially make schools more marketable to prospective students. Research demonstrates that when an alumnus financially gives back to his or her alma mater, he or she is more likely to be civically engaged and provide strong and meaningful volunteer support to the school as well (Ronca & Weerts, 2007).…”

Disparities in Debt

“…Although I cannot directly assess this question, recent research and supplementary findings from this study lend support for the latter rather than the former. First, debt may be problematic because high debt loads increase the risk for college dropout (Dwyer et al 2012), and youth from lower income backgrounds are especially likely to drop out in response to unmet financial need (Chen and Zerquera 2011). As Table 5 shows, young adults from low-income and less educated families are considerably more likely to take on very high debt loads compared to their more advantaged counterparts (debt .$30,000) and are thus at greater risk for dropping out.…”

The Path to Graduation: Factors Predicting On-Time Graduation Rates

“…John, Paulsen, & Carter, 2005;Torres, Gross, & Dadashova, 2010), dropping out (Ishitani & DesJardins, 2002;Joo et al, 2008), degree completion (Dwyer, McCloud, & Hodson, 2012;Perna, 1998), and time-to-degree (Lam, 1999). Previous research has focused on the effects that family income and financial aid have on college persistence.…”