Undergraduate Borrowing and Its Effects on Plans to Attend Graduate School Prior to and After the 1992 Higher Education Act Amendments

Abstract

As student loan indebtedness has more than doubled in the past decade, it has become important to examine the effects of undergraduate debt on graduate school attendance. The significant increase in student borrowing can be attributed primarily to the passage of the Higher Education Amendments of 1992, which increased federal student loan limits and expanded eligibility in student loan programs. To measure the effects of the increased undergraduate borrowing on graduate school attendance, this study compared graduate school plans of students who attended colleges and universities between 1985-1989 (before the Amendments) and 1994-1998 (after the Amendments). The results indicated a slight negative effect of borrowing on students' plans to attend graduate schools prior to the 1992 Amendments. By contrast, the students who attended school after the 1992 Amendments showed significant positive effects of borrowing, particularly for middle-income students. If middle-income students borrowed money, they were more likely to plan to attend graduate school than students from high-income families with loans.