Educational Debt Research Articles

School Finance Policies, Racial Disparities, and the Exploding Educational Debt: Egregious Evidence from Pennsylvania

This article examines how three relatively recent decisions enacted and upheld by Pennsylvania lawmakers have increased racial disparities in education funding and are helping to explode what Ladson-Billings has termed the educational debt. We find that districts with the highest concentrations of Black and Latinx students are profoundly underfunded. We find that these districts spent $2 billion less than they needed—according to calculations lawmakers enacted into state law in 2008—for their students to have a chance to meet the standards the state set for them. We also find that these districts would have received an additional $1.4 billion in state aid to help them address this underfunding if lawmakers had not abandoned a 2008 formula and an additional $918 million in state funding if lawmakers had used current formulas to distribute their two largest subsidies to school districts. We find that a vast majority of children in Pennsylvania are harmed by these policies. We also find that Black and Latinx students are being particularly shortchanged. We find that districts with the largest proportions of Black and Latinx students are harmed at substantially higher rates than districts with the lowest proportions of Black and Latinx students, even after we restrict our comparison to higher-poverty districts.

Pursuing a Career in Pediatrics: Intersection of Educational Debt and Race/Ethnicity

To examine the associations among pediatric trainees' self-reported race/ethnicity, educational debt, and other factors for pursuing a pediatrics career. Cross-sectional study using data from the American Board of Pediatrics In-training Examination Post-examination Survey years 2018-2020 of categorical pediatric interns. Independent variable of interest was race/ethnicity. Classifications used were White, Hispanic/Latinx, Black/African American, Asian, and other/multiracial. The primary dependent variable was educational debt; secondary dependent variables included the importance of personal, professional, and financial factors in selecting a pediatric career. Means with 95% CIs were computed to summarize scores regarding a factor's importance. Chi-square tests of homogeneity and one-way ANOVA F tests were used to compare proportions and means of dependent variables across levels of self-reported race/ethnicity. A total of 11 150 (91.5%) completed the survey. Of the final analytical sample (7 943), approximately 6.3% self-identified as Black/African American, 8.2% as Hispanic/Latinx, 22% as Asian, and 55% as White; 44% reported >$200 000 of debt. Overall, 33% of those identifying as Black/African American had >$300 000 in educational debt. The highest ranked career factor was interest in a specific disease/patient population. The importance of educational debt in career choices was highest among those identifying as Black/African American, followed by Asians and Hispanic/Latinx. Among all races/ethnicities, the importance of mentorship decreased with higher educational debt. Among individuals pursuing pediatrics, the intersection of race/ethnicity and debt may influence trainees' pursuit of pediatric careers. Educational debt negatively impacts the importance of mentorship.

Credit purpose and the interest rate – Evidence from the European Household Finance and Consumption Survey

AbstractThe article presents empirical evidence for a significant role of stated credit purpose for the level of interest rates paid by the end users of non‐mortgage credit (households). Data for the analysis was drawn from two waves of the Household Finance and Consumption Survey. The results of median regression show that, with the exception of credit for consolidation of other debts, remaining credit purposes were associated with lower interest rates compared to the interest rates of credit for car purchases. Especially low interest rates were evidenced for educational debt. Quantile regression analysis has shown that households which, given their socioeconomic background, experienced the highest interest rate costs, paid additional premiums if their debt was related to consolidation of previous debts or consumption. In the case of households paying relatively low premiums, consolidation of other debts and consumption motives were associated with lower interest rates than loans devoted to car purchase.

The Rising Toll of Public Mental Health Work.

Back to table of contents Next article Taking IssueFull AccessThe Rising Toll of Public Mental Health WorkMark Baptiste, M.D., and Rachel Talley, M.D.Mark BaptisteSearch for more papers by this author, M.D., and Rachel TalleySearch for more papers by this author, M.D.Published Online:1 Jul 2022https://doi.org/10.1176/appi.ps.22073007AboutSectionsPDF/EPUB ToolsAdd to favoritesDownload CitationsTrack Citations ShareShare onFacebookTwitterLinked InEmail Severe mental health workforce shortages and high rates of health care worker burnout have been highlighted as key priority areas to address the U.S. national mental health crisis. Briana S. Last and colleagues (1) present timely findings that underscore the urgency of these priorities. The authors elucidate several facets of the emotional and financial strain experienced by public mental health workers in Philadelphia and demonstrate an inverse association between level of education debt and frequency of evidence-based intervention (EBI) delivery. These findings are alarming but not surprising based on our frontline experience providing clinical care and training in multidisciplinary public mental health settings. Consistent with this study’s findings, we have found that low compensation, high workload driven by volume-based payer incentives, and constant exposure to psychosocially complex and chronically traumatized populations are the ingredients for burnout and high turnover. Despite the best efforts of frontline clinicians and local behavioral health and payer authorities such as those in Philadelphia, these forces can become unsurmountable barriers to sustained uptake of EBIs in settings where they are most needed.Most clinicians in this study needed to work an additional job to supplement their income and carried significant education debt. The authors rightly highlight the crippling effect of low Medicaid reimbursement rates and fee-for-service (FFS) payment models on financial stability and ability to provide appropriate compensation in public mental health settings. Further, FFS financially incentivizes and rewards volume, potentially sacrificing quality. Continuously embedding an EBI can require both initial short-term training/supervision and longer-term, “refresher” venues for training, particularly with staff turnover. In overburdened and understaffed public FFS settings, consistently protecting clinician time for training in EBI is hardly feasible; these tasks compete with the pressure to generate billable encounters. Time and volume demands are uniquely burdensome in public settings because clinicians are charged with applying EBIs from research study conditions to complex populations with multiple comorbid clinical and psychosocial issues. When system financial constraints limit case management access, patients often look to clinicians to assist, further absorbing clinical time. These conditions make the consistent delivery of EBI impossible.Higher rates of reimbursement, increased use of episode-of-care payments with appropriate rates, and increased use of value- and performance-based payment rewarding evidence-based care are critically needed to increase the financial ability of public mental health systems to properly compensate their staff and align payment incentives with delivery of EBI. In addition to these system-level solutions, we applaud Ms. Last and colleagues for suggesting how increased financial resources could be prioritized to directly benefit individual clinicians. We underscore Last and colleagues’ suggestions of compensated ongoing consultation in EBI on the job and wage incentives for use of EBI. Well-intentioned efforts to implement new clinical interventions often do not account for the extra time and energy clinicians require to learn and effectively use these strategies.When a precarious personal financial situation combines with the volume-focused pressure of FFS and the complex conditions of patients in public mental health settings, seeing clinicians experience burnout and secondary stress response is not surprising. High rates of secondary traumatic stress, burnout, and posttraumatic stress disorder in the study’s sample are particularly alarming when coupled with clinician-reported difficulties in affording mental health care. Staff burnout and resultant turnover complicate the ability of public mental health systems to provide consistent long-term provider-patient relationships and care, whether evidence based or not. Beyond the authors’ suggestions of increased peer and supervisory support, benefits covering mental health care and robust employee assistance programs with trauma-informed resources should be considered a mandatory part of trauma-focused EBI intervention, just as is training in the intervention itself. The increased move toward hiring independent contractors removes critical mental health supports for employees.Despite the passion and dedication of frontline public mental health workers, the current financial and emotional toll of their work settings not only stymies sustained uptake of EBI but also threatens the sustainability of this work as a long-term career path. Without significant investment in the financial and emotional well-being of this workforce, we fear a continued migration of talented public mental health clinicians to the private sector.Department of Psychiatry, University of Pennsylvania, Philadelphia.Send correspondence to Dr. Baptiste ([email protected]).Reference1 Last BS, Schriger SH, Becker-Haimes EM, et al.: Economic precarity, financial strain, and job-related stress among philadelphia’s public mental health clinicians. Psychiatr Serv 2022; 73:774–786Abstract, Google Scholar FiguresReferencesCited byDetailsCited ByNone Volume 73Issue 7 July 2022Pages 721-721 Metrics PDF download History Published online 1 July 2022 Published in print 1 July 2022

Associations between career choice and educational debt for fourth-year students of US veterinary schools and colleges, 2001-2021.

To determine whether career choice and starting salary of new DVM graduates in the US were associated with their educational debt accrued during veterinary school. Up to 48,527 fourth-year students at US veterinary schools who responded to the AVMA Senior Survey in 2001 through 2021 and accepted a full-time position or advanced education opportunity. To determine whether career choice was associated with educational debt, multiple linear regression was performed, controlling for graduation year, gender, age, marital status, having children, tuition level, and school location. The correlation between educational debt and starting salary was also determined. On average, mean educational debt increased by $6,110 each successive year. A mean of 60.5% of respondents accepted positions in private practice (public practice, 3.3%; advanced education, 36.2%). Respondents choosing public practice had a mean of $24,913 less debt than those choosing advanced education, controlling for other factors. Respondents choosing public practice also had less debt than those choosing private practice, but debt did not differ significantly between private practice and advanced education. The correlation between educational debt and starting salary was significant but low (r = 0.177). Findings suggested that the amount of debt incurred during veterinary school was associated with new veterinarians' career paths. Notably, graduates with higher debt levels appeared to seek higher paying jobs or clinical training that might lead to higher paying jobs, leaving public practice-a field in which critical needs have been identified-underrepresented despite the availability of loan forgiveness programs and other incentives.

Reframing Educational Outcomes: Moving beyond Achievement Gaps.

The term “achievement gap” has a negative and racialized history, and using the term reinforces a deficit mindset that is ingrained in U.S. educational systems. In this essay, we review the literature that demonstrates why “achievement gap” reflects deficit thinking. We explain why biology education researchers should avoid using the phrase and also caution that changing vocabulary alone will not suffice. Instead, we suggest that researchers explicitly apply frameworks that are supportive, name racially systemic inequities and embrace student identity. We review four such frameworks—opportunity gaps, educational debt, community cultural wealth, and ethics of care—and reinterpret salient examples from biology education research as an example of each framework. Although not exhaustive, these descriptions form a starting place for biology education researchers to explicitly name systems-level and asset-based frameworks as they work to end educational inequities.

Student loan debt and financial education: a qualitative analysis of resident perceptions and implications for resident well-being

ABSTRACT High educational debt is prevalent among resident physicians and correlates with adverse well-being outcomes, including symptoms of stress and burnout. Residents also report low financial literacy levels, affecting financial well-being. Understanding resident viewpoints toward financial well-being initiatives is crucial to develop targeted resident financial well-being programs. This study aims to examine residents’ experiences financing their medical education and how these experiences influence well-being and attitudes toward financial education in residency. We recruited residents from a Southern California health system with residency programs in Family Medicine, Internal Medicine, General Surgery, Orthopaedic Surgery, and Psychiatry. We contacted residents by email and text message to participate in semi-structured interviews. We conducted interviews from October 2020 to March 2021 and analyzed 59 resident interviews using reflexive thematic analysis. Among residents, 76% (45/59) had ≥ $200,000 in student loans. Residents perceived mounting medical education debt as unfairly burdensome for trainees engaged in socially beneficial work, leaving residents feeling undervalued – a feeling heightened by the stressors of the COVID-19 pandemic – and hampering well-being. Compartmentalizing debt attenuated financial stressors but often made financial education seem less pressing. A subset of residents described how financial planning restored some agency and enhanced well-being, noting that protected didactic time for financial education was crucial. Resident interviews provide practical guidance regarding designing financial education sessions. Desired education included managing debt, retirement planning, and the business of medicine. How residents framed educational debt and their degree of financial literacy impacted their well-being and sense of agency. Residents proposed that residency programs can aid in stress mitigation by providing residents with skills to help manage debt and plan for retirement. To reduce clinician indebtedness, this approach needs to occur in tandem with systemic changes to financing medical education.

Improving the financial wellness of general surgery residents: A nationwide survey

BackgroundOur study evaluated general surgery resident indebtedness and perspectives on financial compensation. MethodsIn May 2020, a survey was distributed nationwide by general surgery program directors in the Association of Program Directors in Surgery on a voluntary basis to their residents. ResultsThe survey was completed by 419 general surgery residents. Median salary was $60–65 K and median medical educational debt was $200–250 K. Approximately 61% of residents reported that their financial needs were not met by their income. Most residents (76%) believe that for a fair compensation, their salaries should be 30–50% higher. Proposed interventions for improvement in resident compensation included: overtime payment, redirection of GME funds to the residency programs, and compensating residents for billable services. ConclusionsResidents enter training with significant medical educational debt and feel unfairly compensated for their work. Therefore, comprehensive interventions with input from residents are needed to improve their financial well-being.

Financial Capability, Financial Education, and Student Loan Debt: Expected and Unexpected Results

This study used the 2015 National Financial Capability Study to investigate the relationships among financial capability, financial education, and student loan debt outcomes. Specifically, this study examines four student loan outcomes: delinquency, stress, preparation, and satisfaction among borrowers who obtained loans for themselves. Three forms of financial capability (objective financial knowledge, subjective financial knowledge, and perceived financial capability) and two forms of financial education (formal school/workplace education and informal parental education) were used as potential predictors in the study. The Probit regression results showed that expectedly, several financial capability and financial education factors were positively associated with desirable financial outcomes such as loan calculation and loan satisfaction, and negatively associated with undesirable outcomes such as loan stress and loan delinquency. However, this study also showed several unexpected results. For example, objective financial knowledge was negatively associated with loan calculation and loan satisfaction, and subjective knowledge and formal financial education were positively associated with loan delinquency.

Socio-economic status, educational debt, and career choices of social work students in the Southeast United States

ABSTRACT An important goal of the social work profession is to maintain a qualified and accessible professional workforce across all practice areas. Little is known about socio-economic diversity among social work students and potential associations with career choices. The purpose of this project is to describe economic circumstances of social work students and to explore any associations between socio-economic status, debt, intent to stay in the social work profession, and their desired practice area. In this sample of social work students in the Southeastern United States, we find that the majority of students work and accrue student loan debt while in school. Parents’ education level was associated with preference to work in healthcare, mental health/substance abuse, and education settings over nonprofit settings. Parents’ income level had a non-linear association with likelihood of staying in the social work field. Students rated stability and health insurance as more important to choosing a job than salary. We find some potential influence of socio-economic status on career choices of social work students. Given this potential influence, educators should provide information about the features of different practice areas in the social work field and strategies for managing debt after graduation, especially for first generation students.

The Price of Access: Graduate Student Debt for Students of Color 2000 to 2016

ABSTRACT Despite an increase in enrollments across public and private higher education sectors, Black/African American and Hispanic students in graduate and professional programs are disproportionately affected by educational debt. Using nationally-representative data from NPSAS:2000 and NPSAS:2016, findings show that, in general, Black/African American and Hispanic graduate students borrowed more than students of other races and experienced the largest percentage increase in borrowing from 2000 to 2016. While debt is typically higher for all graduate students in private versus public institutions, the highest debt was incurred by Black/African Americans in private for-profit programs. Implications are discussed, including the need to provide opportunities for enrollment without creating disproportionately higher debt for students of color.

A First Look at the VA MISSION Act Veteran Health Administration Medical School Scholarship and Loan Repayment Programs.

The US Department of Veterans Affairs (VA) is challenged by physician staffing shortages. The 2018 VA MISSION ACT authorized 2 scholarship and loan repayment programs. The Health Professions Scholarship Program (HPSP) created scholarships for physicians and dentists. The Education Debt Reduction Program (EDRP) increased the maximum debt reduction. The Specialty Education Loan Repayment Program (SELRP) authorized the repayment of educational loans for physicians in specialties deemed necessary for VA. The Veterans Healing Veterans (VHV) program was a 1-year pilot program specifically for veteran medical students. For academic years 2020/2021 and 2021/2022, HPSP offered 54 scholarships with 51 accepted. In 2020, the VHV program offered 22 scholarships with 12 accepted by recipients at all 5 Teague-Cranston medical schools and 4 Historically Black Colleges and Universities. For SELRP, 14 applicants have been approved in family medicine, internal medicine, emergency medicine, and geriatrics. The average loan repayment is anticipated to be $110,000, which equates to 38.5 VA service years for the 14 applicants. Since 2018, 1546 physicians received EDRP awards with amounts increased from an average of $96,090 in 2018 to $148,302 in 2020. The VA MISSION Act's scholarship and loan repayment programs provide VA with several ways to address physician workforce shortages. Ultimately, the success of the program will be determined by the recruitment of scholarship recipients to VA careers.

Predictors of job satisfaction among pharmacists: A regional workforce survey

BackgroundJob satisfaction affects organizational outcomes including performance and retention. The pharmacy job satisfaction literature points to several predictors of job satisfaction, but educational debt and various work settings have not been previously examined. ObjectivesTo identify predictors of Virginia pharmacists' job satisfaction. MethodsThis cross-sectional study used data from the 2018 Virginia Pharmacist Workforce Survey. Of 15,424 registered pharmacists, 13,962 (90.5%) completed the survey. Pharmacists who reported being employed and working in Virginia in the previous year (2017) were included in the analysis (n = 6042). Data were summarized using descriptive statistics. Multiple logistic regression identified predictors of job satisfaction. ResultsRespondents were primarily female (66.3%), Pharm.D. degree holders (65.5%), with a 14.8-year average work experience. Most pharmacists (86%) reported being very/somewhat satisfied with their job. Educational debt was not significantly associated with job satisfaction. Significant predictors of job satisfaction included: being female (aOR = 1.28, 95% CI 1.08, 1.52); working <30 (aOR = 1.80, 95% CI 1.14, 2.84), 30–39 (aOR = 1.47, 95% CI 1.02, 2.11), or 40–49 (aOR = 1.42, 95% CI 1.02, 1.98) versus ≥50 h per week; earning an annual income of <$50,000 (aOR = 0.60, 95% CI 0.38, 0.94) or ≥ $150,000 (aOR = 2.05, 95% CI 1.30, 3.23) versus $100,000–$149,999; working in an independent community pharmacy (aOR = 3.72, 95% CI 2.54, 5.44), health system (aOR = 3.81, 95% CI 2.78, 5.22), clinic-based pharmacy (aOR = 4.39, 95% CI 2.18, 8.83), academia (aOR = 5.20, 95% CI 1.97, 13.73), benefits administration (aOR = 3.64, 95% CI 1.71, 7.74), long-term home and home health/infusion (aOR = 1.71, 95% CI 1.10, 2.67), mass merchandiser community (aOR = 0.79, 95% CI 0.62, 0.99), or manufacturer and wholesale distributor (aOR = 3.46, 95% CI 1.97, 6.08) versus chain community pharmacy. ConclusionsOverall, Virginia pharmacists reported high job satisfaction. Pharmacists working in chain community pharmacy reported lower satisfaction relative to other settings. Being female, having a high annual income, and working for less hours was associated with improved job satisfaction.

Characteristics of and comparisons between US fourth-year veterinary students graduating with and without educational debt from 2001 through 2020.

To characterize and compare fourth-year students of US veterinary schools graduating with and without related educational debt (ie, DVM debt) from 2001 through 2020. 45,756 fourth-year veterinary students who participated in the annual AVMA Senior Survey from 2001 through 2020. Survey data were summarized for variables hypothesized to be associated with DVM debt. Multivariable modeling was used to investigate associations between these variables and the likelihood of graduating with DVM debt. Mean DVM debt increased fairly steadily from $56,824 in 2001 (n = 1,587) to $157,146 in 2020 (2,859). Of 45,756 students, 6,129 (13.4%) had no DVM debt. Attending Tuskegee University and having children (both men and women) were associated with an increased likelihood of DVM debt. Attending certain other veterinary schools and more recent survey year were associated with a decreased likelihood. For 2020, the likelihood of DVM debt decreased with increasing percentage of tuition paid by family and increased with increasing percentage of tuition paid by educational loans, being a woman with children, and increasing total cost of attendance. No association was found with state cost of living index or per capita income. Results suggested a growing rift between US veterinary students who cannot afford tuition and fees without accumulating financially concerning levels of debt and those who have the financial ability or family situation to fully fund veterinary school. Efforts should be undertaken to recruit across socioeconomic statuses and provide meaningful scholarships to students with greatest financial needs to support diversity, equity, and inclusion in veterinary medicine.

Health Professions Educational Debt: Personal, Professional, and Psychological Impacts 5 Years Post-graduation.

IntroductionCost burden in health professions education is rising. To bridge the gap between growing tuition and stagnating wages, student loans are increasingly obtained to cover educational costs. The spiraling after-effects are a source of acute concern, raising alarms across institutions and occupations. There is little dissemination to date of feasible data collection strategies and outcomes beyond 1 year post-graduation. Research is needed in evaluating the impacts of healthcare educational debt on career and personal choices following transition to practice.Materials and MethodsThis study utilized a cross-sectional, mixed methods design. Doctor of Physical Therapy (DPT) Program graduates 5 years following degree completion completed a quantitative online survey, with topics including debt-to-income ratio, educational debt repayment strategies, impact on personal factors, non-education debt, and perceived value of their health professions education. Subsequent phone interviews were conducted by student researchers to gain insights into alumni perceptions of the impacts of educational debt on personal and professional decision-making. Data analysis involved descriptive and correlational quantitative statistics and open and axial coding of interview constructs.ResultsThe mixed methods format was successful in obtaining desired depth of response data. Quantitative findings demonstrated primary factors impacted by educational debt as savings, housing, leisure, discretionary spending, and family planning. Qualitative findings revealed impacts on themes of “personal factors” (81%), “professional factors” (62.5%), and “psychological factors” (56%) 5 years after graduation. Most negatively impacted were housing decisions, hours worked, initial job selection, and ability to save for the future, contributing to decreased mental health wellbeing with anxiety, frustration, and guilt. The majority (75%) of respondents perceived a high degree of value during and following their DPT education, though many expressed discordance between expectations and realities of practice.DiscussionFindings demonstrate that impacts of health professional educational debt in professional, personal, and psychological factors continue 5 years following degree completion, regardless of debt load. Successful implementation of this pilot methodology indicates potential for use of such extended data collection strategies. Further research is needed at the programs, profession, and/or interprofessional level to garner depth of understanding to guide interventions designed to mitigate or prevent these long-term repercussions.

Practice purchase and private employment options for the new graduate with student debt: A projected scenario analysis for loan repayment

BackgroundWhen attracting talent to dentistry, graduates need educational costs justified by future financial outcomes. The authors provide insights into how career choices (employee versus practice owner) and student loan repayment plans (principal-based versus income-driven) can be made to work. MethodsFive loan repayment and career choice combinations were assessed using spreadsheets (Microsoft Excel) to rationally model monthly budgets and financial decisions during a projected 40-year work life. ResultsEven with high levels of student loan debt ($292,169 average for new graduates), it is still possible, but increasingly difficult, to achieve desirable career, lifestyle, and financial outcomes. Outcomes are highly sensitive to rates of investment returns and inflation. On the basis of the 5 scenarios of projections of debt and income levels to 2060, assuming reasonable levels of investment return and stable inflation, career and repayment choices can make a difference of more than $5 million in lifetime earnings and more than $3 million in retirement savings (2020 dollars). ConclusionsThe new reality of high educational debt requires graduates to budget and plan before beginning their careers. Use of loan servicers, consultants, brokers, attorneys, certified public accountants, and financial advisors is needed. Working for a dental service organization is a valid option for developing dental and practice management skills. Owning a practice is still a viable career path. Practical ImplicationsDental graduates should choose a student loan repayment that minimizes the size of monthly payments, balance budgets, practice frugality, obtain a practice purchase loan at lowest rates, and heed financial advisors.

Good debt, bad debt: family debt portfolios and financial burdens

PurposeIn recent decades, research on consumer debt and well-being is emerging. However, research on the potential effect of debt portfolios on family financial well-being is limited. The purpose of this study is to fill this research gap by examining the potential effect of debt portfolios on family financial well-being, measured by three indicators of progressive financial burdens. These indicators include debt pressure (debt payment to income ratio >40%), debt delinquency (60+ days late for debt payments) and insolvency (total liability > total asset). Debt portfolios refer to various combinations of mortgage, credit card, vehicle, education and other loans.Design/methodology/approachWith data from the 2019 Survey of Consumer Finances in the USA, multivariate logistic regressions are used to identify specific debt types, consumer backgrounds and financial capability factors that are significantly associated with debt burden indicators. The findings are used to create a table demonstrating warning debt portfolios that may lead to undesirable financial outcomes.FindingsHoldings of different types of debts are associated with different financial burdens. Specifically, holdings of three types of debts (mortgage, vehicle and other debts) tend to increase debt pressure; holdings of two types of debts (education and other debts) tend to increase debt delinquency; and holdings of four types of debts (mortgage, credit card, education and other debts) tend to increase insolvency. These results are used to construct warning debt portfolios that show greater chances of undesirable financial outcomes. Among them, the top warning portfolio for debt pressure is the combined holding of mortgage-vehicle-other debts; for debt delinquency is the holding of education-other debts; and for insolvency is the holding of mortgage-credit card-education-other debts.Research limitations/implicationsThis study is limited by using only cross-sectional survey data to examine associations between debt portfolios and financial burdens. To examine the causality of debt portfolios on financial burdens, appropriate panel data are necessary, which is a direction for future research. In addition, this study used data from only one developed country. In future research, data from more countries, including both developed and developing countries, should be analyzed to verify if similar relationships exist among families in other countries.Practical implicationsResults of this study have implications for practitioners in banking and other financial institutions. The study presents a comprehensive list of debt portfolios in the order from high risk to low risk in terms of financial burdens. Banking and other financial service professionals can use the information to help their clients make informed borrowing decisions, predict their debt burdens and offer early preventions based on their clients' debt portfolios. Marketing strategists can use the information for effective segmentation and promotion purposes.Originality/valueThis study utilizes a new concept, debt portfolios and examines its associations with family financial burdens. Financial burdens include three indicators that are seldom used together in previous research. These indicators conceptually indicate various severity levels of debt burdens. This study also presents a conceptual discussion on the association between debt portfolios and financial burdens and provides a better understanding of consumer debt behavior and its consequences. The warning debt portfolios constructed based on the findings have direct managerial implications for banking and other financial service professionals.

Student debt and default: The role of for-profit colleges

For-profit providers have become an important fixture of US higher education markets. Students who attend for-profit institutions take on more educational debt and are more likely to default on their student loans than those attending similarly-selective public schools. Because for-profits tend to serve students from more disadvantaged backgrounds, it is important to isolate the causal effect of for-profit enrollment on student debt and repayment outcomes as well as the educational and labor market mechanisms that drive any such effects. We approach this problem using a novel instrument combined with comprehensive institution-level data on student debt, default, educational attainment, and labor market outcomes. Our instrument leverages the interaction between changes in the demand for college due to labor demand shocks and the baseline supply of for-profit schools. We compare how enrollment and subsequent outcomes change across areas that experience similar labor demand shocks but that have different latent supply of for-profit institutions. The first-stage estimates show that students are much more likely to enroll in a for-profit institution for a given labor demand change when there is a higher supply of such schools in the base period. Among four-year students, for-profit enrollment leads to more loans, higher loan amounts, an increased likelihood of borrowing, and an increased risk of default. Two-year for-profit students also take out more loans, originate more student debt, and have higher default rates. We present evidence that these debt and default outcomes are driven by higher for-profit tuition and a negative effect of for-profit enrollment on labor market outcomes. Our results point to high costs and low returns to for-profit enrollment that generate worse student debt and repayment outcomes. These findings have important implications for public investments in higher education as well as for how students make postsecondary choices.

Do Parents Matter for Student Loan Repayment after Graduation?

Previous studies suggest that a college degree is the great equalizer leveling the playing field. However, the rapidly growing educational debt of college graduates might restrict their life chances throughout adulthood, particularly for those raised in socioeconomically disadvantaged families. This study uses data from the National Survey of College Graduates to examine whether parents’ socioeconomic status is related to their children’s student loan repayment after graduation. Holding the amount borrowed for completing higher education constant, college graduates with less educated parents hold a larger amount of educational debt in adulthood compared with their counterparts with more educated parents. The association between family background and student loan repayment remains significant with the addition of controls for various covariates related to college graduates’ education, occupation, income, and other labor market outcomes. This study suggests that educational debt burdens imposed on individual college graduates limit the meritocratic power of higher education.

“Not Nearly as Bad”: Social Comparisons and the Debt Experience

Despite the growing awareness of the role that families play in the experience of student borrowing, debt is still understood as a private experience. As student debt becomes more widespread, individuals are increasingly likely to know others with student loans, yet questions remain about how others—friends, acquaintances, and colleagues—may shape the way student borrowers make sense of their debt. This study draws on interviews with recent master’s degree recipients to examine how young adults understand their educational debt in relation to others. The author finds that borrowers are enmeshed in “debt dense” social networks that both normalize debt and facilitate evaluative social comparisons against others that accentuate borrowers’ own efforts and responsibility. These findings demonstrate a role for occupational and educational social networks in shaping borrowers’ experience of indebtedness but also suggest limits to framing student debt as a collective problem.