Abstract

After years of emphasizing college access in the US, lawmakers have become more concerned with college completion, this is because there has been a decline in the completion rate. Although there are other reasons, college affordability is one of the reasons why some students may start college but not complete it. Student loans are often justified on the grounds that higher education has economic benefits such as, it leads to higher salaries and improved employment prospects. Research has shown that grant aid increases the probability of enrollment in postsecondary education. Thus, grant aid is important to students’ postsecondary opportunities and success. This study uses Pearson correlation, t-test and linear regression to evaluate the data and establish the relationship between Pell grants and Federal Student Loans. It seeks to find if a statistically significant relationship exists between Pell Grant and Student Loan. Keywords: Student Loan, Pell Grant, Four-Year Public Institutions, Louisiana, Financial Aid, Federal Student Loan DOI: 10.7176/JEP/11-9-04 Publication date: March 31 st 2020

Highlights

  • The student loan debt crisis has been a subject of concern to both researchers and the general public

  • In 2019 alone, the overall Amount of student loan debt was an outstanding $1.41 trillion in the United States with 54% of college attendees taking on debt to pay for their education, 14.4% of adults with a student loan and 10.8% of students with student debt that's past due for at least 90 days or in default (Matt T, 2019)

  • This study used Pearson correlation to establish if a positive or a negative relationship exists between the variables (Pell Grant and Student Loan), it used the t-test to test if a statistically significant relationship exists between the variables and it used linear regression to analyze the data Linear Regression (y= a + bx) where y= Student Loan & x= Pell Grant

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Summary

Introduction

The student loan debt crisis has been a subject of concern to both researchers and the general public. There has been a 6% increase in student loan debt in the US from 2018 to 2019 with 33% rise since 2014, when the total debt was $1.06 trillion(Matt T, 2019). The increasing cost of college is certainly a big factor in growing student loan debt (Brugel et al, 1977). Approximately two out of five US adults are still paying off student loans and are unable to save for retirement. The Pell Grant program is administered by the United States Department of Education, which determines the student's Pell eligibility through their financial need. The Pell grants doesn’t have to be repaid(Davidson, 2014; Baum, 2015; Mastrorilli, 2016; Rosinger and Ford, 2019)

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