Doctor of Philosophy / School of Family Studies and Human Services / Sonya L. Britt / This study explored whether the use of debt, specifically mortgages and student loans, has a negative relationship with wealth accumulation over a consumer’s lifetime. The analysis looked at whether exploration questioned whether consumer debt is incongruent with good personal financial management and consumers should hold a philosophy of avoidance of debt in order to accumulate more wealth. Some financial planners believe in leveraging current assets in hopes of accelerating wealth accumulation. The latter approach is more congruent with a behavioral life-cycle hypothesis perspective (Shefrin & Thaler, 1988), which posits that consumers are the happiest when consumption remains relatively constant over a lifetime through use of debt and savings. To account for wealth accumulation across the lifespan, a measure of relative net worth was constructed by taking current net worth divided by current annual income divided by age. Relative net worth was used rather than net worth in order to allow comparisons between consumers of different ages and income. Data were collected from a sample of convenience, recruited from social media, friends and their acquaintances, and the clients of financial advisors who agreed to distribute the survey. Four ordinary least squares (OLS) regression analyses were conducted to determine the influence of current mortgage relative to the value of the home, mortgage obtained at the time of home purchase as a multiple of income, and student loans at graduation as a multiple of income on relative net worth accumulations. Results suggested that current mortgage debt that is 80% or less of home value, lack of a mortgage, and completing higher education without student debt are associated with higher relative net worth. Using a sample of convenience, the respondent pool was not nationally representative. In comparison to the United States population, the sample population is more highly educated, has a higher percentage of married and individuals in a committed relationship, contains more adults over the age of 50, and does not reflect the ethnic diversity of the United States. This study did not provide deep new insight into the factors contributing to wealth accumulation. It showed that mortgages and student loans alone do not have a large impact on wealth accumulation. This is evidenced by the low R² for all regressions (ranging from .00 to .07). Of the independent variables chosen for regression, the impact was not large and statistical significance for those factors was not present in all regressions. The results of this study do not provide direct support to the ability to use mortgages and student loans as part of wealth accumulation strategies. Future studies may be able to incorporate other elements with debt decisions as well as the impact of financial advice on the use and levels of debt as part of an integrated wealth accumulation strategy. The level of debt to positively impact socioeconomic status is also another area for future study.

I use a canonical model similar to that of Golosov, Tsyvinski, and Werning (2006) to highlight salient properties of the standard tax system used to decentralize constrained efficient allocations. I first show that while labor and wealth taxes are mainly used for efficiency purposes, risk-sharing is achieved through lump-sum transfers. I then show through various examples that ignoring parts of the optimal tax system---a recurring theme in the literature---can lead to sizable welfare losses. In order to evaluate the causal effect of student loans on labor market outcomes, we exploit the eligibility for the need-based Stafford loan program (subsidized Stafford loans) to implement a regression kink design. Using a nationally representative sample of students graduating with a bachelor's degree in 1993, we establish that student loan debt leads to lower earnings after graduation. Estimates show that an additional hundred dollars of Stafford loan reduces 1994 annual income by about 0.1%. Extrapolating this result, earnings for an individual with the mean level of borrowing are 5% lower than those of an individual with no debt. The impact of an additional hundred dollars of student debt decreases income by 0.4% in 1997, and the impact of debt on earnings vanishes by 2003. Economic theory shows that there exists a simple mechanism consistent with the empirical finding, whereby more debt leads individuals to quickly find employment rather than wait for an ideal job. Crucial for this result is that student debt is not dischargeable in bankruptcy. Indeed, when debt is dischargeable, higher debt can cause individuals to search for higher paying jobs that are harder to find. Absent government or otherwise imposed restrictions, competitive loan markets are incompatible with identifiable subsets of the population subsidizing others. We use that insight to identify and measure inefficiencies in government student loan programs using linked survey and administrative data from the Beginning Postsecondary Student (BPS) longitudinal surveys. We use loan repayment histories to compute realized returns for borrowers. We then estimate considerable heterogeneity in expected returns based on ex ante observable characteristics, which suggests inefficiencies that private lenders might exploit by cream-skimming more profitable borrowers. We explore the potential for cream-skimming under different assumptions about the costs of capital for private lenders and study its implications for the pool of government student loan borrowers and expected returns to the government. Finally, we analyze the extent to which student loan limits can be modified based on borrower characteristics to equate expected returns and alleviate concerns about cream-skimming.

The previous research on student debt indicates that the financial concerns associated with being in debt have a significant effect on the individual's academic performance. In the present study, a sample of 328 current students at the University of Canterbury was questioned to identify the effects of student debt on students' course selection, motivation, happiness and academic performance. Students' debt levels increased with the level of university study, and the largest form of student borrowing was from the Student Loan Scheme. While students with no debt performed better academically than those with debt, students' attitudes towards debt were found to influence the relationship between debt level and academic performance. Students who were tolerant towards debt performed better as they accumulated more debt while students who were intolerant performed worse. In general, there is little indication that student debt has a direct effect on students' course selection, motivation, happiness and academic performance. Implications of current findings are mentioned. Limitations and directions for future research are discussed.

Thesis advisor: Eve Spangler / Student debt affects a multitude of gifted and intelligent college students each year. In order to attend our nation’s premier universities, members of the lower and middle classes must procure loans which prove debilitating to their respective economic situations. Upon graduating, such financial burden ultimately forces these individuals to choose economic pragmatism over the pursuit of their true passions. This growing reality calls for a reexamination of the American system of higher education, particularly the underlying ideology behind it – the American Dream. Through an analysis of eight interviews and the use of supporting data, this study reflects the need for drastic reform. / Thesis (BA) — Boston College, 2010. / Submitted to: Boston College. College of Arts and Sciences. / Discipline: Sociology Honors Program. / Discipline: Sociology.

The previous research on student debt indicates that the financial concerns associated with being in debt have a significant effect on the individual's academic performance. In the present study, a sample of 328 current students at the University of Canterbury was questioned to identify the effects of student debt on students' course selection, motivation, happiness and academic performance. Students' debt levels increased with the level of university study, and the largest form of student borrowing was from the Student Loan Scheme. While students with no debt performed better academically than those with debt, students' attitudes towards debt were found to influence the relationship between debt level and academic performance. Students who were tolerant towards debt performed better as they accumulated more debt while students who were intolerant performed worse. In general, there is little indication that student debt has a direct effect on students' course selection, motivation, happiness and academic performance. Implications of current findings are mentioned. Limitations and directions for future research are discussed.

The purpose of this study was to examine the effect of the changes to federal student aid, which were implemented on July 1, 2012, on student loan debt in Mississippi’s publicly-supported community colleges, particularly the change in the Estimated Family Contribution. The literature indicates a national epidemic of student borrowing. This research could provide Mississippi community college administrators the opportunity to observe and evaluate actual changes and to better understand the problem of student loan debt, which is escalating nationally. This study is expected to provide community college leaders a snapshot of the magnitude of the problem so that they can better understand if and how to respond. 8 of the 12 Mississippi community colleges participating in the federal direct student loan program were included in this study. Information on gender, ethnicity, and actual loan amount was gathered from each institution. Comparisons were made of the federal direct student loan debt before and after the July 1, 2012 changes. A quasi-experimental design was used to perform the study. Secondary data acquired from each institution were gathered on all students participating in the federal direct student loan program; therefore, random assignment was not used. The researcher utilized one-way ANOVAs for analyzing mean changes in actual loan amount. Chi-square analyses were used to determine significant changes in the number of loans incurred following the July 1, 2012 changes to federal student aid. Although the study identified significant differences in mean loan debt and numbers of loans incurred by Mississippi community colleges before and after the changes which became effective July 1, 2012, the changes were not in the direction anticipated. Annual student loan debt in the participating community colleges and the number of loans acquired, in the form of federal direct student loans, actually declined while the Estimated Family Contribution increased. Considerations for further studies are discussed.

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The rising cost of tuition and fees is no doubt a major contributor to rising student debt but it is certainly not the only factor. The amount of debt with which students may graduate can largely be a function of the type of institution they attend (Monks, 2014). There is a dearth of research that focuses on the institutional factors that relate to student debt consumption (Craig and Raisanen, 2014; Macy and Terry, 2007). Prior studies have shown that the amount of expenditures and the area in which an institution spends their money can impact salient student outcomes This quantitative dissertation sought to examine institutional expenditures within higher education and their possible relationship to student debt through a fixed-effects analysis that used data across a six-year period. This study examined public comprehensive master's level institutions as defined by the Carnegie Classification system. This institutional type has been overlooked within higher education research (Henderson, 2007). In short, this dissertation sought to investigate the relationship between spending within the public comprehensive master's level institution and average annual federal student loan use. This study found that there was a modest negative relationship between spending on research and academic support and student loan consumption. Spending on operation of maintenance and plant was positively related to student loan consumption. This dissertation further found that the number of students receiving the Pell grant, the percent of students that identify as Hispanic and the number of full-time equivalent (FTE) students were statistically significant regarding their student loan use. The percent of students receiving the Pell grant within an institution related to higher levels of student debt. The percent of students that identify as Hispanic and the number of FTEs were related to lower average levels of student debt. This study has implications for policymakers and administrators pursuing factors that reduce student loan usage and gives insight into the impacts of institutional spending. These findings also have implications for future research that explores not only institutional spending and student outcomes but also how spending may impact institutional mission and the composition of a student body. / Ph. D. / There is no doubt that the cost of enrolling in a college or university has increased dramatically during the past few decades. There is significant research on the impacts of student loan use and what groups of students may be more or less prone to use student loans and possible associated outcomes (i.e. racial/ethnic background, job placement, homeownership and likelihood of default to name a few). What is far less explored are the ways in which an institution as a whole may impact student loan use. For example, we know very little about whether or not similar students attending similar schools would consume the same amount of student loans. If they do not this could be for a number of reasons. Unfortunately, there is a very limited set of studies that explore this phenomenon. This study explores one part of this puzzle by examining the spending patterns of public comprehensive master’s level institutions (i.e. Radford University, Eastern Kentucky University, Cal State Northridge) and their relationship to student loan use during a six-year period. Because these institutions tend to be less prominent than large research universities (Virginia Tech) they are often overlooked within higher education research. Prior research has found that the relationship between institutional spending and student outcome factors such as time to graduation, leadership development, and even the student body’s perception of their university are related. This study was undertaken in a very similar manner except the student outcome was the average annual amount of student loans consumed within the institutional population. There were relationships between spending categories (i.e. research, academic support and operation of maintenance and plant) and student loan use and not between other areas of spending (i.e. instruction, auxiliary, institutional support and student services). The findings from this study are important because even though we understand student loan use and the amount of debt students graduate with is a major concern we know little about the multitude of factors that may have an impact. This study is also important because it is easily replicable and draws data from easily available public databases. As student debt continues to be a concern and college administrators struggle to make up for lost revenues we should have measures and iv models that allow researchers and policymakers to readily explore how changes to a university’s spending patterns and even institutional classification may be effecting students.

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Student loan debt continues to be an issue in the U.S., with potential long-term effects on loan repayment and potential wealth accumulation. In particular, minorities face barriers in the educational system and accruing wealth. Hispanics occupy a middling position in the U.S. racial hierarchy. Using the National Longitudinal Survey of Youth 1997 geocode data, in this study I examined how Hispanic-White differences in student debt change over time and how student debt influences wealth. In addition, I accounted for immigration status via parents' nativity status to investigate debt burdens and subsequent wealth for these respondents. I used hierarchical linear growth models to examine debt growth over time and linear decomposition to examine Hispanic-White differences in wealth accumulation and the impact of student debt on these differences. While findings were largely statistically insignificant, I found that Hispanics tended to start with less debt than their White counterparts and that student debt initially grew for both groups. However, White respondents pay off their debt more quickly than Hispanics. In addition, I found that the wealth gap between White and Hispanic respondents grew significantly between the ages of 20 and 35. While Hispanics tended to start with less debt, my findings suggest that student debt still plays a role in Hispanics' financial well-being, including Hispanic wealth development and the perpetuation of the Hispanic-White wealth gap.