Student Loans:

Limited Information Is Available to Determine How Students' College Debt Affects Their School and Lifestyle Decisions

HEHS-98-97R: Published: Mar 25, 1998. Publicly Released: Mar 25, 1998.

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Pursuant to a congressional request, GAO reviewed the availability of information on the extent to which students' debt or anticipated debt affected: (1) students' choices about whether and where to enroll in college or whether or how much to borrow in order to attend; (2) the length of time it took baccalaureate graduates to earn their degree and their choices regarding graduate school and employment; and (3) graduates' burden of repayment as reflected by their ability to save for retirement or invest in a home.

GAO noted that: (1) GAO's search did not identify current, comprehensive data or other information that would allow it to readily determine the extent to which debt influences students' decisions about whether and where to attend college, how long to take in completing a bachelor's degree program, whether or where to attend graduate school or what job to take, or how able they are as graduates to buy a house or save for retirement; (2) while GAO identified 19 studies that provided a general sense of some of the effects of student debt burden, much of the information was dated or pertained to a limited population, or the studies did not control for the effects of other factors in such decisions; (3) previous research has suggested, for example, that the debt aversiveness of low-income groups and certain minorities may tend to deter them from post-secondary enrollment; (4) one of the studies GAO reviewed suggested that the enrollment effects of income and ethnic differences may be much less than previously reported when college preparedness is considered; (5) nevertheless, from the studies that GAO reviewed, the enrollment and lifestyle decisions of some students do seem to reflect college debt considerations; (6) notwithstanding their limitations, the studies that GAO reviewed showed that college debt has affected the behavior of some students; (7) a Department of Education survey of 1992-93 bachelor's degree recipients one year after their graduation found that almost one-fourth of respondents who had ever considered applying to graduate school cited either their debt amount or insufficient financial resources as their reason for not applying; (8) in another study, the Department reported that students with college loans were less likely to attend graduate school within the year of receiving their degree than students without college debt; (9) while these studies show that students' college debt can affect their graduate school attendance, career plans, and home purchase, they also demonstrate the types of data shortcomings that prevent generalizing their results to today's graduates nationwide; and (10) however, a more definitive understanding of the effects of student debt or anticipated debt on today's enrollment, career, and savings behavior would entail a more in-depth analysis of nationally representative data on students with post-1992 loans.

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