Patricia Somers

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					Student Loan Blues
      Pat Somers, Ph.D.
    University of Texas at Austin
• Student price response – quantitative
• Student loans – qualitative studies
  • Themes: College knowledge, The U, All in the
    family, Special pops, Avoidance, The future,
• Recommendations
    Student Price Response
• What is it?
  • How students respond to increases in
    tuition and aid in enrollment and
    persistence decisions
  • Expressed in percentile point changes per
    $100 increments
• In the 1980s
  • Negative response to tuition increases
  • Positive response to grants
         More price response
• In the 1990s (post-1992 Reauthorization),
  •   Large positive coefficients for grants
  •   Large positive coefficients for loans
  •   Positive for tuition
  •   Negative coefficient for high accumulated debtload
• In 2000,
  • Smaller coefficients for aid, grants, tuition, loans
  • Large positive coefficient for high-income students
    for tax credits
• After 2000, chose cheaper institutions?
       College Knowledge
• How much do potential students know
  about student loans?
• How much do potential students know
  about college life?
   “You’d better wake up”
• I thought you had to pay them all back at
  once. Like, when you graduated….
• Our high school counselor didn’t know
  anything about financial aid. Our English
  teacher had to tell him.
   “Ain’t no ocean wide enough”
• This university was the closest school. . .however, [it]
  doesn’t offer a degree in theater. I had to change my
  goals [and major in] public relations.
• Cheap is important. I would have considered getting
  a medical degree if the debtload was not so
• I chose [this university] for one reason: ‘cause it’s
• My parents appreciated the choice of a [college]
  close to home and [the] lower cost alternative.
• I’m paying my own way and I can afford the credit
  hours [here].
           The University
• What’s the university responsibility to
  the student?
             “Can U deliver?”
• Those admissions officers are just like used car
• . . .[the university] told me that when you get into. .
  .school, there’s gonna be all kinds of scholarships
  and money available, and there’s not.
• They’ll [the university] loan you all the money you
• . . .the first thing they want you to do [is borrow
  money] especially now since all direct loans go
  through the schools and they’re making the money
  off the interest.
          All in the family
• How do finances affect family dynamics
  and decisions?
         “It’s a family affair”
• I’m working all this time, but how am I going
  to pay for two or three children to go to
  college if I’m still paying my loans?
• My loans pay for my child care. . .What am I
  supposed to do, leave the kids on the street?
  My credit cards pay for food. I can live on
  macaroni and cheese, but my kids can’t.
• My banker loves to see us. Between my wife
  and I, we owe $60,000.
               “Daddy’s gonna pay for
                 your crashed car”
                      (but not your tuition)
• . . .undergraduate, my parents paid for everything, so I didn’t
  have to take up a loan. [But when I go to graduate school] it’s
  loan time.
• My brother [and I] are both in school now, and my parents can’t
  afford to send both of us and pay all the costs involved. . .I have
  $15,000 in loans. How am I going to pay this back? How long is
  it going to take to pay it back? What’s the interest on it?
• My parents were retired my whole B.S. degree career, so I did it
  on my own.
• I only had to take a loan my last year in [undergraduate] school
  because I totaled my car.
         Housenote without
            the house
• I won’t be able to buy a car or house
  right away. This [student loan payment]
  is just like having a housenote without
  the house.
• I’m figuring about $20,00 a year here,
  so that’s about $80,000. I want to keep
  it under $100,000. That’s scary; that’s a
           “Do it for the Kids”
• It cost a lot, but my husband and I have a child that is
  4. We are trying to make a better future for us and
  our son. That’s what’s important. That’s why we
  take out student loans.
• Student A: If you have any little children that depend
  on you, then you’ve got to do something. . .you will
  do whatever it takes, I promise.
• Student B: And I just thought you were waiting for the
  bus when I saw you standing on that street corner the
  other day.
       Special populations
• How do minority students respond to
• How do graduate students view their
• How do single mothers view their
• How do two-year students view loans?
               “Our mother the
• I mean I have to [use credit cards just] to . . .live in
  my house and take care of my children. . .
• My car is ten years old and has 177,000 miles on it. .
  .my kids, I don’t also want to wait until they’re twelve
  to take them to Disney. I’m trying to balance between
  being able to do things with my kids because I don’t
  have a lot of time with them right now. . .there is an
  odd balance in there that I’m trying to achieve, and
  loans are working into it. We surely can get a pizza
  tonight because I have to say “no” to so many things,
  that actually a student loan would allow me to say
  “yes” to something.
• [Loans are a] great burden with a fairly high amount
  of stress.
            “Soup is good food”
                         (grad students)

• . . .I was out of school for ten years before I ever came back to
  college. I worked for a while, put back some money, plus my
  parents gave me some money. Then I was on scholarship all
  during my undergraduate.
• I thought that everybody had to have loans to go through school.
  My mom had to have a loan to come back to school. But, I had
  a full scholarship because of my grades in high school. So, I
  didn’t have to take any [loans] out for undergraduate. . .
• So far I haven’t had a loan though I went through about $20,000
  of savings which is pretty well exhausted. At my age, I’m gonna
  be missing about five years of work. . .and I’m avoiding it [loans]
  as much as possible, because I really need to be building up a
  retirement once I get started and not paying off loans.
          Two-year students
• Sticker price more important than net price
   • Grants have most influence
   • Loan avoidance
• [It was] an economic decision [to attend]. I
  wasn’t eligible for aid and this is the cheapest
  place to go.
• It’s the same education but cheaper.
• [I chose this college] because of location and
  low cost. I was able to work and go to school
  at the same time.
       Young, gifted and Black
• Taking out loans is intimidating. But I know if I sit out of school,
  I’ll pay a lot more.
• . . . I don’t like debt a lot because it puts me in mind of
  sharecropper situations and I came from a line of sharecroppers,
  where these people always own you because you always owe
  them. You can’t go very far from them. . .[the] least painful is
  actually educational loans.
• They’re saying, pull yourself up by your boot straps. Well, I ain’t
  got no boots on. You’re the fellow with the boots, you pull
  yourself up. I need some boots first.
• Out of 25 grandchildren, only two of us went to college. I am the
  only college graduate. . .and I was able to graduate only
  because of loans.
             The future
• How do loans influence students’ future
        “Wedding Bell Blues”
• [We’ll wait on] cars, a house, a baby.
• I would not have married the woman had I
  known she had defaulted on $30,000 of
  student loans. (after one divorce and one
  bankruptcy filing)
• I'm getting married in June and she has no
  loans. . .[she’s going to] pay for everything.
  She's bringing all the stuff, and [I’m] bringing
  all the debt.
                “We owe, we owe,
             it’s off to work we go”
• [Loans] have made me look for higher paying positions, but
  have also made attending college a reality for me.
• [Loans have] made me realize the importance of being
  dedicated to my studies so that I may realize the full potential of
  my education and get the best job possible.
• I hope I pay off [my student loans] in full before I die.
• [I’m considering] a traveling position where we can be a
  traveling therapist and make more money. . .you’re on the road
  more often, but you don’t have to pay housing costs, so
  basically all the money you make goes in your pocket. . .I don’t
  want to have this loan for thirty years, I want to pay it off.
• How do students avoid taking out
• Do students choose lower-priced
              “Just a littl’ bit”
• . . .it was a pride thing. I wanted to get
  through without the loans, but I also realized it
  was impossible.
• I thought, I’ll borrow just a little bit. Now, it’s
  like, Oh, I’m gonna be in debt, so I’ll just
  borrow some more.
• The expenses are dirt cheap [here], but what
  is so funny is that we’re all sitting here taking
  out loans because we can’t handle it [the
               “Credit Card Baby”
•   Actually, I’ve charged my tuition, I’ve charged my books, I charged my
    food. [Even with] the amount of loan money I’m going to get this
    semester, I’m still gonna be $100 in the hole, and that’s just rent,
    electric, and phone. That’s not including food. That’s how I’m eating
    this semester, by charging it on my credit cards. So, you get real good
    at playing the interest rate game on credit cards.
•   Why do students use credit cards rather than student loans?
    Desperation. You don’t have to do paperwork. Avoid the confusion
    and headaches. It’s easier. I know one person who had to because
    they didn’t get their financial aid in time, had to wait about two months,
    so they had to pay for school and charged it, and then by the time the
    money came around, they spent the money on something else.
•   I always say you can tell who the freshman are because they push the
    pull doors, pull the push doors, have umbrellas when it’s raining. . . and
    stop at the credit card tables in the student union.
• What do students say about policy
• What do students say about federal
               “Logan to
           government center”
• I’ve given up on the federal government doing
  anything for us. These days I just hope they don’t
  start taking things away
• There are so many people in high positions who
  came out of academia. . .so, you know, maybe they
  need to be reminded about people in universities.
  “Look at where you came from and remember where
  it got you.” The next generation of people like you
  may be denied their opportunity to go to Congress, or
  denied their opportunity to serve the government,
  simply because they are working five jobs trying to
  pay off those debts.
• The mindset that government can do everything
  needs to be eliminated.
             “Senator Speak”
• . . .quit buying hundred dollar soap dishes for
  generals - they don't need them. Go to Wal-Mart and
  get them for $3 like the rest of us.
• It’s like we have nothing but buffoons in office now.
  They get in there and they’re strictly self-serving.
  They work to propagate the good-old-boy system. .
  .like the Congressional pension; it’s ludicrous. They
  should have a pension that should be equal to
  something you’d get in business. . .I think we’re going
  to hit critical mass one of these days where there is
  no longer gonna be anybody there to pay the piper.
  You can’t keep deferring things, like we’re putting
  things off now on the next generation.
• The waste in the student loan program is a drop in
  the bucket. Go after the rest [of the abuse] first.
• Grants for low-income and first-gen
• Sticker price considerations for two-year
• Strategy (high tuition, high aid, etc.)
• Loan forgiveness in strategic areas
Parting songs
           “Help, I need
• Who is your safety net?
  • [The] police.
  • The good Lord.
  • If times get tough, I’ll just have to
          “Money can’t buy
             you love”
• I am an investment.
• I hope to pay off my student loans
  before I die.
• The benefit [of education] far outweighs
  the cost.
      My little deuce coupe
• I’ve got a truckload of debtload!”

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