Afraid of debt, college students are working more, taking fewer credits and starting at community colleges. These debt-dodging strategies raise the risks students won’t graduate, reports AP.
“There’s been such attention on student debt being unmanageable that current students have internalized that,” said Deborah Santiago, co-founder and vice president for policy research at the group Excelencia in Education, a nonprofit advocacy group. In fact, “If you can take out a little bit of loan you’re more likely to complete. If you can go to a more selective institution that gives you more resources and support, you’re more likely to complete.”
Students are borrowing less in real dollars, College Board reports. Private loans are way down as students turn to federal aid.
What’s the upside of borrowing? Federal data analyzed by Santiago’s group and The Institute for Higher Education Policy (IHEP) in 2008 shows roughly 86 percent of students who borrow for college are able to attend full-time, compared to 70 percent of students who don’t borrow. That matters because roughly 60 percent of full-time students receive a bachelor’s degree within eight years, compared to 25 percent of part-time students.
Comparably qualified students are more likely to graduate from a four-year university than a community college, other research shows.
Student debt aversion is most pronounced among Hispanics and Asians, who borrow at lower rates than whites despite having higher financial need. And it appears to have the greatest consequences for Hispanics and blacks.
Fifty-one percent of blacks who had financial need but decided not to borrow had left school within three years without a degree, compared to 39 percent of those who borrowed, the study by Excelencia and IHEP found. For Hispanics, 41 percent of non-borrowers had left, compared to 32 percent who borrowed.
Despite recent tuition jumps at California community colleges, few students take out loans. But they work long hours to pay living expenses, often studying part-time.
Debt aversion is more dangerous than debt, says Eloy Oakley, the president of Long Beach City College.
“The longer they’re in school, the more opportunity they have to be distracted by life events, jobs, families, situations that change in their own families,” says Oakley, whose student body is 41 percent Hispanic and 16 percent Asian. “If we can minimize those exit points and shorten their time to degree, that’s much more advantageous to them.”
Students need “financial literacy” training to understand how to access financial aid and federal loans, balancing reasonable debt against future incomes, advocates say.
However, low graduation rates make debt a higher risk for community college students. A nurse will earn enough to pay off her loans. But most would-be nurses never make it to a degree.
