Search

Between 2005 and 2013, student loan debt in the US increased at a rate of 13.3 per cent per annum. This rise in collegiate student debt has become the focus of any number of new proposals and policies at both the state and national levels. While considering broad policies to stem this rising tide are admirable, they do little to help a graduating high school student interested in minimising their debt level choose between competing institutions of higher learning. In this paper, we analyse the institutional characteristics that result in students assuming higher debt levels. We use a data set compiled from the 2011 Integrated Postsecondary Education Data System and supplement from a variety of sources with additional institutional characteristics such as location and weather to investigate this question. After controlling for the cost of attending the institution, we find that requiring higher standardised test scores on entrance exams and being located in less urban areas result in lower average debt by graduates. Additionally, we identify a non-linear relationship between the income levels of students' families and the debt with which they graduate, with middle-income students and families being the most heavily burdened by debt.

When state appropriations decrease, public universities respond by raising tuition. Students borrow more in response to both tuition increases and appropriation cuts. This article investigates the feedback of how borrowing and tuition influence state appropriations. Using a panel data set of 450 four-year public universities from 1999 to 2012, we employ three-stage least squares techniques to control for the endogeneity between state appropriations, tuition and student borrowing. There is evidence that state policy-makers respond to increases in university tuition and student borrowing by decreasing future appropriation levels. After controlling for the effect of appropriations on tuition and borrowing, a one-dollar increase in student borrowing reduces state appropriations per student by $0.06, and a one-dollar increase in tuition results in a decrease of $0.45 in state appropriations per student. When universities increase tuition for reasons other than a reduction in state appropriations, policy-makers respond with a significant cut in future appropriations which could signal an incentive strategy. [ABSTRACT FROM AUTHOR]

Between 2005 and 2013, student loan debt in the US increased at a rate of 13.3 per cent per annum. This rise in collegiate student debt has become the focus of any number of new proposals and policies at both the state and national levels. While considering broad policies to stem this rising tide are admirable, they do little to help a graduating high school student interested in minimising their debt level choose between competing institutions of higher learning. In this paper, we analyse the institutional characteristics that result in students assuming higher debt levels. We use a data set compiled from the 2011 Integrated Postsecondary Education Data System and supplement from a variety of sources with additional institutional characteristics such as location and weather to investigate this question. After controlling for the cost of attending the institution, we find that requiring higher standardised test scores on entrance exams and being located in less urban areas result in lower average debt by graduates. Additionally, we identify a non-linear relationship between the income levels of students’ families and the debt with which they graduate, with middle-income students and families being the most heavily burdened by debt. [ABSTRACT FROM PUBLISHER]