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Expert briefing
Publication date: 17 June 2019

Economics implications of US student debt.

Details

DOI: 10.1108/OXAN-DB244554

ISSN: 2633-304X

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Geographic
Topical
Book part
Publication date: 7 November 2016

Elissa Chin Lu

As students increasingly incur debt to finance their undergraduate education, there is heightened concern about the long-term implications of loans on borrowers…

Abstract

As students increasingly incur debt to finance their undergraduate education, there is heightened concern about the long-term implications of loans on borrowers, especially borrowers from low socioeconomic backgrounds. Drawing upon the concepts of cultural capital and habitus (Bourdieu & Passeron, 1977), this research explores how student debt and social class intersect and affect individuals’ trajectory into adulthood. Based on 50 interviews with young adults who incurred $30,000–180,000 in undergraduate debt and who were from varying social classes, the findings are presented in terms of a categorization schema (income level by level of cultural capital) and a conceptual model of borrowing. The results illustrate the inequitable payoff that college and debt can have for borrowers with varying levels of cultural resources, with borrowers from low-income, low cultural capital backgrounds more likely to struggle throughout and after college with their loans.

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Paradoxes of the Democratization of Higher Education
Type: Book
ISBN: 978-1-78635-234-7

Book part
Publication date: 9 June 2020

Mathias Sosnowski Krabbe

This chapter explores the role of student loan debt in the lives of American students and graduates in Wisconsin, US. The total amount of student loan debt in the United…

Abstract

This chapter explores the role of student loan debt in the lives of American students and graduates in Wisconsin, US. The total amount of student loan debt in the United States is now at a record high. While debt is considered an integral part of a “forced timeline” toward a greater good, namely the American Dream, it is at the same time a disciplinary mechanism binding individuals to their families in various ways. While most anthropological research on college students and debt has not focused explicitly on student loan debt, this chapter offers insight into a phenomenon currently affecting more than 44 million Americans.

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Anthropological Enquiries into Policy, Debt, Business, and Capitalism
Type: Book
ISBN: 978-1-83909-659-4

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Book part
Publication date: 17 May 2018

Jennie Rose Halperin

Purpose – Drawing on a survey of over 1,000 Library and Information Science (LIS) professionals and over a dozen interviews, this chapter explores the student loan crisis…

Abstract

Purpose – Drawing on a survey of over 1,000 Library and Information Science (LIS) professionals and over a dozen interviews, this chapter explores the student loan crisis from an LIS perspective and offers practical solutions for the field to decrease debt from LIS graduate programs, which has ballooned in recent years.

Design/Methodology/Approach – In April 2016, I sent a survey via email to approximately 10 library-affiliated listservs ranging from Code4Lib to the UMD iSchool discussion list. While I attempted to keep the reach small and controlled to only library-affiliated listservs, the survey link quickly spread to Twitter and other social media. The survey attracted 1,630 qualified responses and ran for two weeks in total. Using skip logic, all potential respondents who did not attend a library school (26 in total) were automatically disqualified. Email addresses were provided by 497 participants for interview post-survey. I received 215 partial responses. In September 2016, I conducted qualitative interviews with participants. Thirty-two telephone interviews were conducted extending for 15–20 minutes and I received 38 written questionnaires in response to my questions.

Findings – The findings are outlined in sub-chapter headings, including increased tuition does not equal increased aid, older students borrow less and take longer in programs tailored to their needs, new graduates unlikely to pay off their loans soon, and students with high undergraduate debt: a divided loan burden. Other findings include interview results, which are embedded within the chapter.

The final section offers recommendations for LIS programs to lessen the burden for students. These recommendations include better financing information and counseling for students; shorter, more flexible degree programs; apprenticeship model, more pathways for a paraprofessional to professional track; and expand public service loan forgiveness programs.

Originality/Value – This is the first comprehensive qualitative/quantitative study of the cost of library school as well as the debt burden for students. It provides actionable outcomes as well as an analytic framework through which to view the academic debt crisis. It features the voices of librarians from around the country as they struggle through a changing job market and increased monetary burden.

Details

Re-envisioning the MLS: Perspectives on the Future of Library and Information Science Education
Type: Book
ISBN: 978-1-78754-880-0

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Article
Publication date: 28 September 2020

Ken B. Cyree

This study investigates the relation of bank loan delinquencies to Fed Survey delinquency data from 2003 to 2017. Bank-generated loans have lower delinquencies than all…

Abstract

Purpose

This study investigates the relation of bank loan delinquencies to Fed Survey delinquency data from 2003 to 2017. Bank-generated loans have lower delinquencies than all Fed Survey loan types. Survey mortgage and auto loan delinquencies are positively related to bank loan delinquencies indicating complimentary delinquency decisions for borrowers. Conversely, student loans delinquencies are negatively related to bank loans, consistent with borrowers substituting student loan payments for bank debt for the entire sample period. Student loan delinquencies are negatively related to per-capita bankruptcy, and all other types of debt have a positive relation. The relation between Fed Survey loan delinquencies and bank-generated loan delinquencies is time varying and changed after the financial crisis in 2008.

Design/methodology/approach

Seemingly Unrelated Regression is used to study delinquencies for three bank loan types and whether or not they are related to Fed Survey loan delinquencies. The sample is split into pre-financial crisis before 2008 and post-crisis after 2008.

Findings

Seemingly Unrelated Regression (SUR) results show that bank delinquencies for second mortgages and “Other” loan types are consistently complementary to Fed Survey mortgage loan delinquencies. Fed Survey auto loans delinquencies are also consistent with a complimentary relation, and these results are largely driven by the relation after the financial crisis of 2008 since pre-crisis regression results are not significant for every dependent variable. Credit card loan delinquencies have a negative and substitute relation with bank-generated first mortgage loan delinquencies prior to the crisis in 2008, and with bank-generated second mortgages after the crisis. Conversely, student loan delinquencies from the Fed Survey are negatively and significantly related to bank mortgages for the entire sample period, but only with bank-generated first mortgages after 2008. The student loan delinquency results are consistent with income smoothing, on average, although this is not explicitly tested at the micro level since this study uses macro-level data and not borrower-specific data. These findings are also consistent with conventional wisdom that student loans provide “financial slack” and borrower flexibility.

Research limitations/implications

A limiting factor is this study uses macro-level data and not borrower-specific data.

Practical implications

Empirical findings are consistent with prior research that student loans provide income smoothing and “financial slack,” and borrowers with payment challenges will pay other debt before student loans.

Social implications

Borrowers in financial trouble tend to be delinquent for all debt, and more so for student debt.

Originality/value

To investigate whether Fed Survey delinquencies of auto loans, first mortgages, student loans and credit card loans from all sources have complementary or substitution effects with bank debt at a macro level. The study investigates whether bank debt follows “market trends” as a complementary effect, or if bank debt has a negative relation to other debt indicating a substitution effect.

Details

Managerial Finance, vol. 47 no. 3
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 18 October 2022

Nicholas Apergis

This study explores the role of rising US student loan debt in explaining income inequality.

Abstract

Purpose

This study explores the role of rising US student loan debt in explaining income inequality.

Design/methodology/approach

The study uses the autoregressive distributed lag (ARDL) modeling approach to explore the short- and long-run impact of college debt on income inequality in the US through quarterly data over the period 2000–2019.

Findings

The results demonstrate the detrimental impact of student debt on national and regional income inequality. Moreover, the regional analysis highlights a more pronounced impact of student debt on income distribution in South and West regions. The findings document that these regions, with the lower student debt proportions, have the lowest average cost of attending college. Finally, the analysis explores two potential channels – i.e. race and homeownership – that could explain the link between college student debt and income inequality.

Practical implications

The results can be helpful for policymakers and researchers to formulate practical approaches for assessing and addressing the rising national student debt and income inequality.

Originality/value

This is the first, to the best of the author's knowledge, study that explores the impact of US college debt on income inequality.

Details

Journal of Economic Studies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 25 February 2021

Robert H. Scott III and Steven Bloom

This paper aims to examine the relationship between student loan debt and first-time home buying among college graduates aged 23 to 40 years old in the USA.

Abstract

Purpose

This paper aims to examine the relationship between student loan debt and first-time home buying among college graduates aged 23 to 40 years old in the USA.

Design/methodology/approach

The authors use the Federal Reserve’s 2019 Survey of Consumer Finances data on American households to present descriptive statistics and run logistic regressions that measure the effects of student loan debt on first-time home buying. The authors also present original survey data of mortgage lenders that provides an industry-level perspective.

Findings

The authors find that having student loan debt does not by itself prohibit first-time home buyers. On the contrary, having student loan debt increases the likelihood of homeownership by 15.1%. People with student loan debt, however, buy homes that are 39.2% less expensive and have 58% less home equity compared to first-time home buyers without student loans. In addition, it is found that the amount of student loan debt is important. People with student loan debt above the median amount among people with student loan debt ($35,000) are 27% less likely to be first-time home buyers.

Practical implications

This paper provides public policy analysts and other researchers a different perspective on the correlation between student loan debt and home buying. This study focuses narrowly on first-time home buyers who are college graduates between 23 and 40 years. Thus, capturing the youngest cohort of first-time home buyers and examine the primary factors that influence their home buying decisions.

Originality/value

First-time homebuyers are historically the largest segment of home buyers making them an important subcategory to study. The rise in student loan debt is posited to explain declining homeownership among younger people. The current literature on student loan debt and home buying often studies samples that are too heterogeneous resulting in mixed findings. This paper adds to the existing literature by filtering the sample to study the effects of student loan debt and first-time home buying among people with at least a college degree who are between 23 and 40 years.

Details

International Journal of Housing Markets and Analysis, vol. 15 no. 1
Type: Research Article
ISSN: 1753-8270

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Article
Publication date: 1 October 2006

Deirdre O'Loughlin and Isabelle Szmigin

This research seeks to explore current attitudes, motivations and behaviours in relation to student credit and debt consumption in the UK and Ireland.

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Abstract

Purpose

This research seeks to explore current attitudes, motivations and behaviours in relation to student credit and debt consumption in the UK and Ireland.

Design/methodology/approach

Key qualitative consumer research based on 20 interviews with Irish and UK higher education students is presented.

Findings

The findings highlight that, while the UK and Irish student contexts are significantly different in terms of accommodation costs, tuition fees and living expenses, many Irish students reported relatively high debt levels, with some exceeding their UK counterparts. The research identifies key contextual factors associated with the credit‐friendly environment in which students live in addition to shedding light on student orientation towards credit and debt, with specific conclusions for future student debt.

Research limitations/ implications

Given the rise in debt and its detrimental consequences, the study has far‐reaching implications for policy makers, consumer agencies financial providers and marketers in terms of creating an environment where good student financial capability and management is developed and facilitated through increased financial education and regulation. The research has implications for other western countries in terms of predicting comparative trends in student credit and debt attitude and behaviour.

Originality/value

This paper addresses the lack of analytical and academic commentary exploring the dynamics and nature of student credit and debt, particularly within an Irish context, in addition to providing a cross‐cultural comparison between credit and debt consumption in Ireland, where debt is a relatively new phenomenon, and the UK, a country well‐entrenched in debt.

Details

Journal of Consumer Marketing, vol. 23 no. 6
Type: Research Article
ISSN: 0736-3761

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Article
Publication date: 1 December 2001

M. Jill Austin and Melodie R. Phillips

The practice of marketing credit cards on college campuses is becoming increasingly controversial. Critics have charged that credit card companies use unethical practices…

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Abstract

The practice of marketing credit cards on college campuses is becoming increasingly controversial. Critics have charged that credit card companies use unethical practices to encourage students to become overloaded with debt. In response, many colleges now ban credit card solicitors from campus. Perhaps the best way credit card companies can improve their image is to provide specific educational opportunities to students when they fill out credit applications. Includes an empirical study of the debt issues of college students. Results indicate that students can learn specific types of information that should improve their ability to manage their debt. This information includes issues associated with the frequency of use of credit cards, the payment of credit card debt, and the number of credit cards held. Makes specific educational recommendations that should be helpful to companies that currently market credit cards to college students. Results may also provide planning information to banks and credit card companies in parts of the world where credit card usage by college students is not yet widespread, but is likely to increase due to developing free market systems and the increased use of credit worldwide.

Details

Journal of Services Marketing, vol. 15 no. 7
Type: Research Article
ISSN: 0887-6045

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Article
Publication date: 20 February 2009

Felix Maringe, Nick Foskett and Dave Roberts

The aim of this research is to draw from a project sponsored by the Higher Education Academy and undertaken jointly by researchers at the University of Southampton and The…

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Abstract

Purpose

The aim of this research is to draw from a project sponsored by the Higher Education Academy and undertaken jointly by researchers at the University of Southampton and The Knowledge Partnership UK, which aimed to investigate the likely impact of the recently introduced new fees regime on students' attitudes to HE and to issues of debt.

Design/methodology/approach

Based on a sample of 64 students approaching the end of their A level study in four Further Education Colleges in the South and North of England, the research utilised focus group interviews to seek views about the new fees regime which were to be introduced in September 2006 throughout the country.

Findings

The research found that, while the issue of debt was a significant concern for many students, the desire to go to university either immediately or in the long term, remained a strong priority for the students. Different types of debt aversion, including risk debt aversion, sticker type debt aversion, value‐based debt aversion and life‐style debt aversion, were evident from the students' discourses.

Originality/value

Overall, sufficient evidence was not found to support the general belief that issues of student debt would significantly dissuade students from participating in HE. Rather, it was found that students were more likely to be rational in their decisions, as long as the increased fees would add value to their HE experience. Significantly, the research discovers a new form of debt aversion among the participants. HE institutions need to be aware of the variety of forms of debt aversion in order to plan for more strategic recruitment in a new fees and debt economy.

Details

International Journal of Educational Management, vol. 23 no. 2
Type: Research Article
ISSN: 0951-354X

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