Student Loan Essay, English Composition Writing on
Student Loan,
About Student Loans
Essay 1: Are Student Loans Too Costly?
The first lesson of economics is scarcity. There is never enough of
nothing to fully satisfy all who does want it. However, the first
lesson of politics are to disregard the first lesson of economics.
When politicians discover a group who is vocal about the lack of
something they want. The “solution” will be to give them more. Where
does “more” come from?—politicians who rob Peter to pay Paul.
After a while, of course, we discover that Peter doesn’t have
enough. Bursting with compassion. Politics rush to the rescue.
Needless to say, they do not admit that robbing Peter to pay Paul
will be a dumb idea in the first place. On the contrary, they now
rob Tom, Dick, and Harry to help Peter.
The latest chapter in this long-running saga is that politicians
have now suddenly discovered that college students graduate heavy in
debt. To politicians it follows, as the night follows the day, that
the government ,ay come to the rescue with the taxpayer’s money.
How big is this crushing burden of college students’ debt that they
here so much about from politicians and media deep thinkers? For
those students who graduate from public colleges owing money, the
debt averages a little under $7,000. For those who graduate from
private colleges, the average debt is a little under $9,000.
Buying a very modestly priced auto involve more debt than that. And
a car loan has to be paid off faster than the 10 years that college
graduates get to repay his/her
. Moreover, students will
keep buying cars several years, while one college education
last a lifetime.
College graduates, of course, earn higher incomes than other people.
Why, then, should we panic in the thought that they have to repay
loans, for the education giving them their opportunities?
Even graduates with relatively modest incomes pay fewer than 10
percent of there annual salary on the first loan the first year—with
declining percentages in future years, as their pay increased.
Political hysteria and media hype may focus on the low-income
student with a huge debt. This is were we get our heart-rending
stories—even if they are not all that typical. In reality, the
soaring student loans of the past decade have not resulted
from allowing high-income people to borrow under government
programs.
Before 1978, college loans were available through government
programs only to students whose family income was below some cut-off
level, who was about double the national average income, but at
least it kept out the Rockefellers and the Vanderbilts. But, in an
era of “compassion,” Congress left off even those limits.
That opened the floodgates. No matter how rich one was, it still
paid to borrow money threw the government at low interest rates. The
money parents had set aside for their children's education
can be invested some where else, at higher interest rates. Then,
when the student loan became due, parents can pay it off with
the money they had set aside—to pocket the difference in interest
rates.
To politicians and the media, however, the rapidly growing loans
showed what a great “need” there was. The fact that many students
failed to pay when time came to repay their loans showed how
“crushing” their burden of debt has to be. In reality, those who
don’t pay typically have smaller loans but have dropped out of
college before finishing. People who are irresponsible in one way
are always irresponsible in other ways.
No small amount of the deterioration of college standards has been
due to the increasingly easy availability of college to people who
are not very serious about getting an education. College is
not a bad place to hang out for a few years, if someone has nothing
better to do, especially if je/she is paying for it. Its costs are
staggering, but the taxpayers carry much of that burden, not only
for state universities and city colleges, but also to an increasing
extent even for “Private” institutions.
Numerous government subsidies and loan programs make it possible for
many people to use vast amount of societies’ resources at low cost
to themselves. Whether in money terms or in real terms, federal aide
to higher education increased several hundred percent since
1970. That has enabled colleges to raise their tuition by leaps and
bounds and enabling professors to be paid more and more for doing
less and less teaching.
Naturally, all these beneficiaries are going to create hype and
hysteria to keep more of the taxpayers’ money coming in. But we
would be fools to keep on righting blank checks for them.
When we way the cost of things, in economics. That’s called
“trade-offs” in politics, it’s called “mean-spirited.” Apparently,
if we just assumed a different attitude, scarcity would go away.
Essay 2: Should Taxpayers Relieve Students of Loan Commitments
“Why should UK taxpayers support you for three years to read novels,
write poems or play with words?”
As I approach the final few months of my three-year BA English
degree with QTS Secondary Education it seems appropriate for
me to place my fingers on my keyboard and take stock of my time at
university. The dates of my graduation ceremony in summer have been
posted up on the university website; although I have several arduous
assignments to complete before I can don a gown and cap, a teaching
job awaits me at a well-renowned school in September. Friends will
soon delight in being able to poke fun at my reinstated tax-payer
status whilst moaning over my inflated holiday allowance. My
previous career will eventually be forgotten in the need to write
lesson plans and produce interesting and illuminating activities for
the classroom. Perhaps, in a few years’ time, I might only remember
my university years as a means to an end - a caesura in the middle
of a line of a stanza which addresses my life? A brief footnote in
my memoirs? No.
These last three years have stretched and challenged my mind in
exactly the way I wanted when I sent off my university application.
Invited and asked to defend my opinion in seminars, I have developed
confidence in my critical reasoning where there was previously
little. Slowly - but eventually - I reconciled my ‘9 to 5’ work
mind-set with the notion that a day and night’s research and reading
for an essay was not a waste of time. In short, I embraced
education... and it has enveloped me.
As a mature student, it had been over twenty years ago since I had
last felt the fear which comes when somebody whispers the word
“exam” in your presence. I had long been a passionate and informed
reader but feared I would struggle to unravel a Renaissance sonnet.
I might have inherited the gift of the gab from my mum but could I
tell the difference between ‘anaphoric’ and ‘cataphoric’ in an
English language seminar? Could I refrain from thinking of girls
named Anna who own tabbies? Over time, these fears faded, as did my
other old preconceptions on education. For example: learning
environments can now be virtual - there is no need for chalk and
dusters nowadays; and teachers, sorry, tutors never ask you to copy
out of a book. They impart knowledge and feelings instead, and give
off an addictive air of appreciation, making a powerful contribution
to the emotional and intellectual make-up of this soon-to-be
newly-qualified teacher.
Although I will soon be a graduate and will no longer need my
library ID (showing the grinning face of a man who might have read
Arthur Miller but who had no idea of Brecht or Ibsen’s work or what
it is like to have actually written a play), I will always be a
student... of sorts. The ‘University of Life’ which my mother and
father graduated from some years ago with honors will now have to be
expanded to make room for the lifetime of study that I started three
years ago and will now pass on in illuminated dribs and drabs.
Perhaps while they are clearing the ground for my foundation stone,
they should clear a space for others? Maybe someone reading this
essay... perhaps someone wondering if they are cut out for the
‘student experience’?
Immediately after leaving my former career, and before entering
university, I underwent a six-month stint as a volunteer English
teacher in Ghana, West Africa. I saw at first-hand the trials and
tribulations of instructing children in life, literature and
language, and I learned much about myself through the generosity of
the Ghanaians I met and befriended. I felt ready to teach English.
Returning to the UK, I was glad to be able to receive a student
loan to pay my tuition fees; even better, there was a
maintenance grant to go towards paying my rent. The three years
since have flown by, and now I am ready to teach English. I am soon
to join the workforce once again, and feel fortunate to do so at
this tricky economic time. After being supported financially by
others I am now in a position to support others in their dreams and
ambitions. Such a commitment is not taken on lightly but tax-payers
were not consulted over the money which left their monthly pay
packets to help me over the last three years. Perhaps they should
have been polled for their opinion, I wonder. Would these folk put
education – my education – before other, more
pressing, needs?
In answer, I can only reply with this: the true worth of what I have
studied these past three years will be apparent in my classroom and
to all of my pupils. I will be able to relate to aspiring A level
and university students, and can now confidently talk of the actual
benefits of applying yourself to education. As an active,
questioning reader, I can open young minds to the delights of Dylan
Thomas or lasso in a bunch of rowdy Year 10 pupils restless with
studying Of Mice and Men. Having learnt the relevance of meter,
rhythm and stanza my forthcoming renditions of Blake, Hughes,
Armitage and Duffy will not be as flat and uninspiring as the
contents of my brain before entering university. If I had been
denied the chance to debate and enter into dialogue, my chances of
engaging Year 9 on a rainy last period on Friday afternoon would be
slim to none. Without knowledge of the different types of ‘English’
narrative, I would not be the open-minded English teacher, whose
words you read, who is about to commence his new career.
These lessons represent a tiny portion of a huge ‘mountain’ which I
have climbed with the help of others. Other students that I
encountered have been similarly inspired and empowered through their
course. University, nay education, is a force for good. While
all of it may not be for everyone – or, should I say, I’m still not
convinced about a play by a certain Mancunian playwright – it has
something for everyone... and is everything for a certain someone…
Essay 3: The Social Effects of the Student
Loan Scheme
(A Full length research paper based on a New Zealand Perspective)
Student loan
scheme was introduced to New Zealand in 1992. The aim of the scheme
is to assist tertiary students to overcome financial barriers.
According to the scheme, tertiary students who meet certain criteria
can apply for an official loan to cover the tuition fees, but they
need to repay the loan with interest in the future. A consequence of
the SLS is to create a huge amount national educational debt.
In fact, the soaring student debt stresses not only individuals, but
also government. Predictably, the SLS will significantly affect New
Zealanders’ life styles in the long run. This essay is trying to
explore the long-term social impacts of the SLS by comparing the
lifecycles between tertiary students and non-tertiary students. The
evaluation comprises three steps: illustrating the most common
individual difficulties caused by student loans; generating
the most possible long-term social impacts of the scheme; and
discussing the strategies to minimize the negative impacts.
Background
The SLS is a product of the ‘economic reforms’. Since 1984,
neo-liberalism has become the mainstream political ideology in NZ.
The notion of ‘user pays’, therefore, dominates the policy-making.
In the case of the tertiary education, students have to pay
much higher fees for the service. Consequently, financial capacity
becomes a vital criterion in deciding the opportunity for
individuals pursuing tertiary study. However, such ‘money talks’
policy is fundamentally against the political principle of equal
opportunity. Besides, narrowing educational opportunity for
citizens also restricts the national economic growth, because
education expansion is an essential strategy to build the
knowledge economy. In order to overcome political and economic
embarrassment, the NZ government introduced the SLS to provide basic
financial support for people to pursue the tertiary education.
Currently, three government departments are involved in the
performance of the SLS: the Ministry of Education, the
Ministry of Social Development and Inland Revenue. Generally, the
Ministry of Education monitors the tertiary institutions’
operation; the Ministry of Social Development delivers the loan
services to tertiary students; and Inland Revenue is in charge of
the repayment of student loans.
According to the student loan scheme annual report to 30 June
2001, up to 2001, the average amount borrowed in an academic year
was $6,135; 360,612 borrowers were with loans outstanding to Inland
Revenue as at 30 June 2002; the overall average loan repayment times
are estimated at 10.3 years. The present amount of student loan
reaches $ 5 Billion, and is predicted to reach $ 16 Billion by 2020.
Most overseas literature is based on studies in the United States
(US) and the United Kingdom (UK). In addition, gender differences
and economic risks are focused in NZ research.
Among the overseas studies, Volkwein, Szelest, Cabrera and
Npierski-Prancl (1998) find that the most crucial factor relating to
educational loan default was low educational
achievement, although many other factors, such as the kind of
college institution attended, sex and civil status, and the number
of dependent children, also have an influence. Moreover, in 1997,
Boyd conducted a research to analyse the relationship between
discrimination in mortgage lending and educational loans. She
found that students were supposed to repay their educational
loan fully, before they entered the credit market for an assortment
of consumer loans. Her research conclusion was that educational
loans enhanced the boundaries for those in disadvantaged groups to
pursue better economic conditions (Boyd, 1997). According to Kramer
and Dusen (1994), educational loans put students into a
serious financial hardship. In other words, educational loans
contributed to student poverty and high risks of loan default.
In NZ, Warner did a cross-country comparison of the SLS in 1999. He
concentrates on analysing economic risks of the SLS. Warner proposes
that as an official investment in human resources, government needs
to know how to keep a balance between encouraging tertiary education
and ensuring investment returns. He suggests that the loan amount,
the interest rate, and the pace of repayment should be considered
comprehensively when operating the SLS (Warner, 1999). In addition,
Ehrhardt (2002) analyses the different impacts the SLS on gender.
She claims that the SLS has more negative effects on women than on
men, because females earn less, and pay more interests than males.
Because of the scarcity of time and resources, this evaluation has
some unavoidable limitations.
Firstly, the research is a general analysis, which is based on the
assumption that all New Zealanders belong to one hegemonic group: ie
that there are no differences in terms of students’ gender, social
status, and ethnicity, before they entry the tertiary institutions.
However, realistically, the effects of the SLS on different
cultural, socio-economic groups are different. Therefore, a general
study, like this evaluation, cannot reflect reality perfectly.
Secondly, it is difficult to define how long is ‘long-term’.
‘Long-term’ is a relative concept. For example, 10 years seems to be
long enough to check out if the SLS assists students to finish their
tertiary education and go smoothly into the work force, but
it is too short to estimate how well their careers go. Hence,
long-term study on social impacts should be a systematic process
rather than a haphazard activity. Therefore, this evaluation cannot
be considered as a complete assessment of the SLS.
Finally, SLS is not an isolated social policy. It, in fact, has
close relationships with other social agencies, such as economic
performance (Boyd, 1997). For example, the September 11 affected
many graduates’ careers, when foreign capital withdrew from NZ.
However, in this evaluation, the analysis only focuses on a
theoretical model of the lifecycle, which ignores other social
agencies’ influence. Therefore, the isolation is likely to produce
over-simplified outcomes.
The methodology of the research is based on the grounded theory
thinking. It is a bottom-up process. The evaluation starts by
illustrating individuals’ experiences. After comparing the
lifecycles between two typical groups: the non-tertiary student
group and the tertiary student group, the most likely social impacts
will be generated. All data are from the official publications.
There are three assumptions in the study:
There is no differences in social conditions between the two groups,
tertiary and non-tertiary students, before they enter into tertiary
institutions. Both groups gain little financial support from their
family; Both groups have the same level of motivation in working
hard and pursuing life success.
Theoretically, human social experience can be summarized as a model
of a lifecycle. It is “a developmental model, which outlines the
social changes encountered as a person passes through the stages of
childhood, adolescence, mind-life, old age and death” (Bilton et
al., 1996, p.518). In the case of this study, five stages are
considered: pre-schooling phase, compulsory schooling phase,
pre-children phase, child-rearing phase, and retirement.
In NZ, because education is compulsory for all children aged
between six and sixteen years (Ministry of Education, 2001), age 0 -
5 is the pre-schooling phase, and age 5 - 16 is the compulsory
schooling phase. In addition, NZ women are very likely to have their
first child at age 30 (Statistics New Zealand, 2003), so the
pre-children phase is from age 16 to 30. Moreover, as NZ
superannuation is given to people who are 65 and over (Work and
Income & Development, n.d.), the child rearing phase is from age 30
to 65, and the retirement phase starts from age 65.
Furthermore, according to Statistics NZ (2003), the median ages for
men and women to be married for the first time were 29.4 and 27.6
years respectively in 2002, and the average fertility rate was 2.0
births per woman in 1999, therefore, age 28 is regarded as the
marriage age, two children are expected in a family generally.
In this evaluation, age 18 is chosen as the beginning point of the
lifecycle comparison by giving a couple of years for the
non-tertiary and tertiary students to seek jobs or prepare for
Bursary after high school study.
Because of the lack of job guarantee in NZ, the research divides
students in both groups into lucky and less lucky members. The lucky
members refer to those students who are able to follow their career
plans smoothly; while the less lucky members are those who fail to
do so. Considering to the realistic possibility, the average income
of sales assistants’ is chosen to represent the lucky members’
economic condition in non-tertiary group; and the overall salary of
marketing manger is used to be the average income for the lucky
members in tertiary group.
According to Kiwicareers (2003b), the income of sales assistants
varies from $8 to $15 per hour, depending on how long they work in
the shops. Therefore, the lucky members in the non-tertiary group
are likely to double their income in three or four years. Thus, they
can be reasonable independent at age 22 or 23. By age 28 when they
are getting married, they seem to have enough credibility to borrow
money from banks to buy houses. By age 55 when their children grow
up, they can have a few more years to complete the house loans. By
age 65, they can enjoy their retirement with mortgage free
lifestyle. Therefore, those lucky non-tertiary students seem to have
no difficulty to catch up the standard lifecycle in NZ.
As far as the less lucky members are concerned, they are likely to
rely on the government benefits, approximately $11,000 per year
(Work and Income, 2003). Therefore, they tend to have more economic
difficulties in marriage and housing. However, because of their
debt-free condition, they may find it is relatively easier to gain
support form commercial banks than those people in debts.
The life experiences of the tertiary students appear to be
different. Initially, because of lack financial support from home,
the tertiary students are forced to take the student loan and
the student allowance during the study period. The tuition fees vary
from institution to institution, and also have significant
difference in different subjects. In the case of Auckland University
of Technology (AUT), the average tuition fees for the Bachelor of
Arts is $3550 per year, which seems to be the cheapest option for
degree study (Auckland University of Technology, 2003). Excluding
tuition fees, tertiary students need an extra $1000 to cover study
related expenditure in each year. Thus, by the end of their tertiary
study, the students will have total amount $13,650 debt, even if
their institutions do not increase the fees. Besides the debt, the
students have to face financial hardship as well. According to the
Ministry of Social Development, a single student under 25, living
away from home can get maximum $201.65 weekly supplement (student
allowance plus accommodation benefit in Auckland) from the
government, which is only available for 40 weeks per year (Studylink,
2003). It means the guaranteed income for a tertiary student is
$8066 per year. If the student lives in Auckland, the common cost of
accommodation is about $5200 per year. Consequently, there is only
$2866 left for those students to use for food and other things,
which is about $55 per week or $8 per day.
After graduating, for those students who are able to find jobs
quickly and develop their careers smoothly, a student loan
seems to have little negative effects on their life. According to
Kiwicareers (2003a), the salary of marketing manager varies from
$38,000 to $70,000. Therefore, if graduates start the salary at
$32,000, it will take about 12.75 years for the students to payback
their educational loan fully, even if they receive no wage
increases (Owezero organisation NZ, 2003). Thus, those lucky
students are likely to be able to borrow money from the bank to buy
a house at age 34, though 6 years later than the average lifecycle.
However, considering their relatively higher and more stable
economic status, the effects of such delaying should not be
significant.
However, university degrees have never been a job guarantee. Once
the tertiary students could not find reasonable income jobs after
graduation, they would face very difficult lifestyle. For instance,
if graduates with $13,650 debt in hand can only gain a job as sales
assistant, they need to start at $10,650 annual income at age 21.
Because they are unable to repay their debt immediately, the debt
will be over $18,000 (7% interest) in three years. Thus it will take
those students more than 21 years to pay back the debt, even if they
are able to keep the $32,000 salary after age 25. It means those
graduates cannot be debt free until they are 43-year old.
Consequently, they have much less opportunity to buy their own
houses. In other words, the educational debt can lead to a
life-long financial hardship for some tertiary students.
Additional Reference Material and Fact Sheet:
Financial Aid and College
Affordability Issues
• Low-income, African American, and Latino families are less
informed about financial aid; they tend to overestimate the cost of
tuition and underestimate available aid. (Longanecker, D.A., &
Blanco, C.D. (2003). Student financial assistance. In Student
Success: Statewide P-16 systems. Denver, CO: State Higher Education
Executive Officers and Pathways to College Network Research Paper)
• The cost of attendance and financial aid availability are more
important factors in determining college enrollment for low-income,
African American, and Hispanic students, than for White,
middle-income, and upper-income students. (Heller, D.E. (1997).
Student price response in higher education. Journal of Higher
Education, 68(6), 624-659)
• Low-income students face formidable financial barriers to college
access and success. (A Shared Agenda: A Leadership Challenge to
Improve College Access and Success. (2004) The Pathways to College
Network)
• College affordability has become a much greater problem for
low-income families. In 2002, public college costs amounted to 60
percent of yearly income of low-income families; private college
costs were 160 percent of income. (The College Board. (2002). Trends
in college pricing. Washington, DC: The College Board, p. 9)
• Financial aid has not kept pace with increasing college costs: the
average Pell grant now covers 25 percent of total costs at public
four-year colleges – down from 47 percent in 1975 – and down to 10
percent of private college costs – down from 24 percent in 1975.
(The College Board. (2002). Trends in student aid. Washington, DC:
The College Board)
• Only 21 percent of high school graduates with family incomes below
$25,000 were highly or very highly qualified for college, compared
with 35 percent of high school graduates with family incomes between
$25,000 and $75,000 and 56 percent of students with family incomes
greater than $75,000. Further, 36 percent of White high school
graduates were highly or very highly qualified for college, compared
with 16 percent of African-Americans and 19 percent of Latinos. (The
Condition of Education, National Center for Education
Statistics, 2000)
• In tax year 1998, about one-third of the estimated eligible
families claimed an education tax credit, claiming only about
$3.4 billion of the estimated $7 billion in eligible credits. (T. R.
Wolanin, Rhetoric and Reality: Effects and Consequences of the HOPE
Scholarship. 2001, p. 13, 2001. Citing “Remarks as prepared for
delivery by U.S. Secretary of Education Richard W. Riley,”
Association of American Colleges and Universities, Washington, D.C.,
January 20, 2000)
• In 1972, middle-income families needed 13 percent of their income
to meet the needs of a four-year public institution. By 1999, this
number had risen to 16 percent. In comparison, low-income families
in 1972 needed 42 percent of their income to meet college costs and
62 percent in 1999. These affordability indices are more dramatic
for private institutions. Middle-income families needed 27 percent
of their income in 1972 and 43 percent in 1999 to cover tuition at a
four-year private college. Low-income families needed 87 percent of
their income in 1972 and 163 percent in 1999. (Trends in College
Pricing 2000, College Entrance Examination Board, New York, p. 14,
2000)
• Between 1996 and 2000, tuition at public four-year and two-year
colleges increased about 25 percent and increased about 31 percent
at private four-year colleges. During this five-year period, median
household income rose 25.4 percent, and the cost of consumer goods
increased by 12.4 percent. (College Tuition and Fees: Changes in the
1995-1996 to 1999-2000 Period Compared With Median Household Income,
United States General Accounting Office, GAO/HEHS-00-198R: pp. 3-6,
2000)
• Unmet financial need for low-income students ranges from $3,200 at
public two-year colleges to $3,800 at public four-year colleges and
$6,200 at private four-year colleges. (Access Denied, Advisory
Committee on Student Financial Assistance, February 2001)
• The average unmet need increased 33 percent from $3,000 to $4,000
between 1995 and 1999 according to the National Postsecondary
Student Aid Survey (NPSAS: 2000). (Tom Mortenson, personal
correspondence, January 2002)
• A full Pell Grant covered 78 percent of tuition for a public
four-year institution in 1975. In 1999, a full Pell covered 39
percent of tuition. Given the increase in the traditional
college-age population and assuming Pell funding increases 4 percent
each year for the next 10 years, by 2010 Pell funding will be $2.042
billion short of providing the year 2000 level of value. Other
reports state Pell Grants covered 84 percent of tuition in 1975-1976
and 40 percent in 2000-2001. (Stephen Burd, “Rift Grows Over What
Keeps Low-Income Students Out of College,” The Chronicle of Higher
Education, January 25, 2002. JBL Associates, Presentation at
the 2000 National Governors Association Center for Best Practices)
• In 2000-01, $51 billion of the $74 billion in total available
financial aid was from federal programs. Of the $51 billion in
federal financial aid, $37 billion was in the form of student
loans administered through the Federal Family Education
Loan Program (FFELP) or Ford Direct Loan Program. Since 1980,
federal student loans have grown 516 percent compared with
232 percent growth in the Pell Grant program. During the 1990s, Pell
Grants grew 23 percent in inflation-adjusted dollars, compared with
58 percent growth in FFELP and 425 percent growth in direct loans
(tracked since 1994-95). (Trends in Student Aid The College Board,
2001)
• African-Americans are less likely to borrow for college because
the returns on a college education are lower for
African-Americans compared with Whites, and because the levels of
debt required in many cases exceeds their annual family income.
(Robert M. Hauser, “The Decline in College Entry Among
African-Americans: Findings in Search of an Explanation,” Prejudice,
Politics and Race in America Today, 1992)
• The higher net costs of college restricts the options for
low-income students, who are increasingly attending community
colleges. These higher net costs are partly a function of the
declining percentage of tuition covered by federal financial aid
grants: between 1986 and 1993 the percentage declined from 68
percent to 42 percent. (Michael McPherson and Morton Owen Schapiro,
The Student Aid Game: Meeting Need and Rewarding Talent in Higher
Education, 1998)
• In general, grants have a stronger influence on college enrollment
behavior than do loans. African-American, Latino and low-income
students are more price responsive than are White and middle and
upper-income students. (Price responsive means that the students are
less likely to enroll in college or are more likely to change the
type of institution in which they enroll.) (Don Heller, “Student
Price Response in Higher Education: An Update to Leslie and
Brinkman,” Journal of Higher Education, 68(6), 1997)
• Targeting grants to low-income students is likely to result in
increased enrollments. For example, a $1,000 increase in grant aid
increases enrollment rates for low-income students by 9 percentage
points, while a similar increase in tuition would decrease
enrollment rates by 3.4 percentage points. The same increase in
grant aid has a 3-percentage-point positive effect for lower-middle
and middle-income students. (Alberto F. Carbrera and Steven M. La
Nasa, Understanding the College Choice of Disadvantaged Students:
New Directions for Institutional Research, 107, Fall 2000)
• An additional $1,000 grant reduces the probability of a
first-year, low-income student dropping out by 23 percent.
(Challenges in Promoting Access and Excellence in Education,
United States General Accounting Office, GAO/T-HEHS-97-99: p. 8.,
1997)
• Medium and high debt levels reduce the probability of persistence
between 4 and 7 percent for students at private colleges. Tuition
levels and the amount of grants exert more influence on persistence
at public colleges than do debt levels. (James Cofer and Patricia
Somers, “A Comparison of the Influence of Debtload on the
Persistence of Students at Public and Private Colleges,” Journal of
Student Financial Aid, 30(2), 2000)
• Undergraduates who borrow reduced their odds of obtaining a
graduate or professional degree within four years by 9 percent.
(Derek V. Price, “Graduate and Professional Degree Attainment Among
1992-93 College Graduates,” unpublished monograph, Lumina Foundation
for Education, 2001)
• Summarizing the literature, the authors report that grants and
work-study financial aid awards are beneficial to persistence, but
that loans are not. They also report “means-tested student aid is
effective in compensating for the disadvantage of low-income, so
that low-income students who receive it are as likely to persist in
college as are more affluent students.” (Therese L. Baker and
William Velez, “Access to and Opportunity in Postsecondary
Education in the United States: A Review,” Sociology of
Education, 1996)
• Almost eight out of ten African-Americans who earn a bachelor’s
degree borrow, and the average amount of student loan debt
they accrue is $13,000. The average loan debt for African-Americans
who complete an associate degree program is $6,500. Among Latino
students who graduate with a bachelor’s degree, almost 70 percent
have debt averaging $11,500. For comparison, just over half of White
bachelor’s degree recipients borrowed while in college, and their
average indebtedness is $12,300. (Jacqueline E. King, Money Matters:
The Impact of Race/Ethnicity and Gender on How Students Pay for
College, American Council on Education, 1999)
• Thirty-nine percent of student loan recipients graduate
with unmanageable debt, defined as debt repayments that exceed 8
percent of monthly income. In comparison, 55 percent of
African-American and 58 percent of Latino student borrowers graduate
with unmanageable debt burden. (“The Burden of Borrowing: A report
on the rising rates of student loan debt” (Executive
Summary), State PIRG’s Higher Education Project, 2001)
• Student loans paid for 95 percent of the increased charges
to students at four-year public colleges between 1991 and 1995. In
the following four years, loans covered 62 percent of these
increases. (Jerry S. Davis, “Higher Education, Increasingly
Important for All Americans, is Unaffordable for Many,”
Illuminations, Lumina Foundation for Education, August 2002)
