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					              Student Loans and their Effects on College Consumption

                                       Peter Comes
                                       Joe Franzwa
                                     Everett Sommer
                       University of Illinois at Urbana-Champaign

                               Dr. Mary Arends-Kuenning
                                       ACE 398


Student loans are becoming more of a problem for college students across many
campuses’ nation wide because of increasing tuition costs and decreasing amounts of
grants and scholarships. Data was collected from a campus online survey and focus
groups were conducted with University of Illinois Students, both methods focued on
student loans and how they affects a college student’s consumption. The results of the
research have shown that college students at this university are not worried about their
student loans and it does not affect their current consumption greatly, but does affect
larger purchase decisions slightly. This finding has shown that college students should
possibly be more aware of their student loans while attending college.

       As tuition has significantly increased over the past 20-30 years, it has become

very common for college students to finance their education through loans. Tuition has

become so expensive that it has become near impossible for a student to pay for their

education by working. As a result, many students graduate college with thousands of

dollars of debt waiting to be paid off. Debt from student loans has become a common

reality and something students nowadays just accept. People believe that a college

education is worth the price tag because it leads to a good job and higher earnings.

       The purpose of this research project is to find out more about the connection

between student loans and consumption. The research sets out to answer if students

spend more or less if they have a loan and their reasoning behind some of their decisions.

It is hypothesized that most college students just accept the fact that they are in debt.

They do not worry about their loans because they expect to make a decent salary after

they graduate and believe they will be able to pay the loans back later in life. In addition,

it is expected that students with loans are more likely to be in credit card debt and hold

jobs. Regardless of what the data indicates, something needs to be done about the rising

cost of tuition. Students also need to be made more aware of the dangers of debt before

entering college so they can make better financial decisions.

Literary Review

       There is a vast assortment of literature on student loans and debt that particularly

emphasize the situations of young people. Anya Kamenetz is the author of “Generation

Debt,” a literature work on the debt problems 18-34 year olds face. She goes into detail

on how student loans have been and will continue to negatively affect student’s financial

and educational decisions because the cost of attending college has been increasing. In

addition, the author Jeffrey Williams wrote “Student Debt and the Spirit of Indenture,”

and compares student loans to indentured servants of England in the 1600’s because of

increasing pressure to pay off loans. Both authors use very similar statistics and analysis

to describe the environment of higher education and its effects that they are having on the

current and climbing population of young people. The findings were very similar, and

each author takes strong stances on policies that affect college students, and will be

discussed below.

       Each author has found that the real cost of college has been increasing over the

last two to three decades. The price of college has risen faster than inflation for the last

three decades and faster than family income for the last fifteen years. The cost of college

for the average American family is increasing at unprecedented rates because of state

budget cuts and lack of funding for grants. Two out of three students enrolled in college

in this nation have to finance their way through college using student loans. In 2004, the

average college senior graduate had an astounding $19,200 in debt. There are many

different estimations of average debt, some ranging higher or lower than others, but

$19,200 seems to be a moderately conservative estimation of debt for an average

graduate. In addition, the average indebtedness on credit cards for college students is

$2,169 with over 90% of graduating seniors having a credit card. With student loans

being harder to obtain, it is agreed that many students have had to place their loans on

their credit cards to be able to finance their education.

       These statistics show how much debt average college students are holding, and

appears to be problematic. Increases in tuition are affecting the rate at which college

students are borrowing, as well as an increase in need for high school students to get a

college education. Many estimates have put the lifetime earnings differentials of a

college graduate and a high school graduate at over $1,000,000 in life time earnings.

46% of 24 year olds in the top quintile of earnings had bachelor’s degree, versus 8% of

college graduates in bottom quintile, showing the need to get a bachelor’s to assure a

higher income stream. With this being said, the cost of not getting a college education

can be very expensive over a lifetime, causing increases in amounts of high school

students to attend college. In 1970 there were seven million college students, and just

thirty two years later in 1992, there were fourteen million, despite of an increase of three

million total populations from 36-39 million. Getting a degree is no longer getting an

education, but becoming an investment towards future earnings potentials.

       Another problem that college students are facing is the shrinking amounts of

grants being given to students. In 1971 45% of aid from the government came in the

form of student loans, and 52% came in the form of a grant. There has been a reversal in

this trend, however, and in the late 1990’s just 41% of aid came in grants and 58%

through student loans. During the budget cuts from the federal government in the 1990’s,

the federal government found it to be less costly to give out more federal loans versus

grants. During college, the federal government pays for your interest, and the interest

does not start until six months after graduation and decided to use this method as its

primary source of funding. In 1972, the prestigious Pell Grant covered 72% of costs for a

college student, and in 2004 just 36% of costs were covered.

       With less amounts of grants being given out, students must pick up the bill by

taking out loans. Often private loans are the solution because it is becoming harder to

get a student loan through the federal government. The private loan industry has

becoming an extremely profitable industry. In 1995 the private loan industry grew from

$1.1 billion to $15 billion in 2005 and many companies recorded record profits during

this time period. Private loans are often used and are much riskier and costlier than

federal loans to students. Private loans offer much higher interest rates (often nearing

commercial loan rates), no deferments, no grace periods, and fewer repayment options.

       In the 2007-2008 school years an average University of Illinois graduating senior

had $17,938 in debt. Comparably, in 2003-2004 a graduating senior had only $13,994 in

debt from the student financial aid office, so these figure do not even count private loans

taken out. In just a four year period, the average debt increased by nearly four and a half

thousand dollars, and with a net increase of over 29% (located in Appendix G, is the full

table). This has been caused by increases in tuition over time at this university because

of state cuts and increases in projects such as the ARC and many other campus wide

projects. In this four year period the amount borrowed went from around $83 million to

nearly $122 million, which was an increase of 40.5% in this short time period. The

increase of students over this time period increased as well, and went from 5,785

graduating seniors students to 6,892. The percentage of the students that borrowed

stayed fairly steady that went from 48% to 51%, so the university is giving the same

percentage of funding for student loans, but has to offer it to over a thousand more

students paying higher tuition costs. As we can see, there has been a sharp increase in the

amount of students while keeping the same percentage borrowing that is making students

in our university needing to borrow more money. Information on private loans is rarely

available because of the vast assortments of banks that offer private student loans, so

these figures only include state and federal aid.


       In order to gather quantitative and qualitative data about the effect of having

tuition loans s on college spending, we conducted three focus groups with university

undergrad students as well as analyzed data from an online survey. The online survey

was a multi-topic class collaboration of 103 questions; 33 were directed towards our

topic. In order to send out this survey via a university email list, it had to be approved by

Rhonda Kirts who is the Associate Dean of Students. She reviewed the questions to make

sure they were appropriate and valid. The survey was sent by Campus Information

Technologies and Educational Services at the University of Illinois (CITES) to a sample

of 4,753 students who were selected to represents a 10% sample of the university. The

sample was selected by the office of Carol Livingstone, Associate Provost and Director,

Division of Management Information. The email that was sent is viewable in appendix A.

421 students responded to the survey, which is an 8.9% response rate and a .89%

response from of the entire university. Appendix B lists the exact questions from the

survey we chose to analyze. Students answered basic demographics such as year in

school, race and gender so we could consider if there was any significant difference

among demographics, the sample is analyzed in the sample section of the paper. We also

asked about different types of income like summer or school jobs or parent’s support to

see if this had an effect on loan size. The survey also asked students to estimate the

amount of their loan upon graduation and how long they think it will take to pay it back.

The survey allowed us to get numbers that may be more difficult in a focus group

because asking about income and loan amounts is a subject that is very personal to some

students. We analyzed the trends of the survey in the results section of this paper and

discuss the implication of the data in the discussion section.

       In addition to collecting survey data, we chose to conduct three focus groups to

get qualitative data and personal experiences from University of Illinois Undergrads.

Focus groups were an excellent way of gathering information that surveys can not always

get. Surveys limit the choices or manner of answering a question and may misrepresent

the participant. Focus groups are also different than an interview because interviews do

not capture the socialized disclosure that come from group behavior. In a focus group, the

moderator asks the group a question and leaves the floor open for a group discussion.

This allows participants to encourage one another and causes them to disclose more

information (Krueger and Casey, 2000). We initially planned on doing four focus groups,

three with students who have loans and one with students with no loans. By doing focus

groups with those with and without loans separately, we would be able to capture the

opinions of both groups with fewer conflicts of opinions.

       The recruitment process was difficult, and we were forced to take more than one

approach. Our initial plan was to hand out a survey that would help us pick a diverse set

of students. This survey is viewable under appendix C. We went to the Courtyard Café in

the Illini Union to pass out recruitment surveys. We chose the Courtyard Café since there

are always a mixed group of undergrads who are usually in-between class and therefore

less likely to mind filling out a survey. To incentivize students to fill out a survey, we

offered them candy bars. Before filling out the survey, they were also given the option to

read our research project information form which is viewable in appendix D. We were

able to gather 43 surveys from about an even number of males and females and a good

mix of ages. The most important information on the survey was to find out if they had a

loan, and if so, to what amount. We also asked if they would be willing to participate in a

focus group and what their available times were. To our surprise, about half of the people

surveyed said they were willing to meet. We decided to invite everyone that agreed to

meet since we thought the response rate might be low. A copy of the email we sent is

located in appendix E. Since this was our first attempt to gather a focus group, we

decided to offer a very attractive incentive. Participants of our group would receive

refreshments of pizza as well as a $10 gift certificate to Best Buy—at the time we didn’t

realize gift cards were not allowed. We offered two different possible times and told them

they must respond to take part in the discussion. Sadly, we only received a response from

one person who was willing to meet. In hindsight, the requirement may have been at a

busy time for students in the semester. We tried to conduct these focus groups the week

before thanksgiving break which is a hectic time for students due to midterms and

projects. Because of the overwhelming lack of willingness to participate, we were forced

to take an alternative approach to recruitment. We decided each group member would be

responsible for conducting one focus group and would recruit participants that were our

own personal acquaintances. Everett moderated a group of two seniors and two juniors all

of which were males. Peter moderated a group of six male seniors. Joe moderated a group

of males, three sophomores and one senior. Each of the moderators provided pizza, soda

and snacks for their participants. Discussions lasted for about a half hour each.

Participants signed proper consent forms and the sessions were recorded and transcribed.


       The online survey was sent out to 4,753 students in an attempt to gather data from

a set of students that numerically represented the student body. The university is 64%

Caucasian, 13% Asian/ Pacific Islander, 7% Hispanic, 7% African American, 6%

Foreign, 2% Unknown race and less then 1% Native American. The sample sent was

targeted towards 41% Caucasian, 9% Asian/ Pacific Islander, 5% Hispanic, 4% African

American, 40% Foreign, 1% Unknown race and less then 1% Native American. We see a

significant difference in the amount of foreign students targeted for this sample, 40%

compared to 6%. Although this would not have been our preferred target sample, we

were sharing this survey with another group that was studying only international students.

Therefore, our survey was sent out to every single international student, 1899 in total.

The response of 421 students were 55% Caucasian, 17% Asian/ Pacific Islander, 4%

Hispanic, 1% African American, less then 1% Native American and 23% “other”. The

response sample was fairly close for the majority groups: Caucasians, 55% compared to

64% and Asians, 17% compared to 13%. However, there was a large amount of students

that classified themselves as “other”. It was found that 92% of those that claimed to be

“other” were international students. We decided to omit all responses from international

students and leave them out of our analysis. Although the study of international students

and loans may be interesting, it was not congruent with our thesis. After this adjustment,

the response, although small, is a fairy good representation of the student body.

       Another important demographic of the survey was year in school, gender, and

major. The sample response was very even among all years: 28% freshmen, 23%

sophomore, 24% junior, and 25% seniors represented the sample response. Gender was

also fairly close but with a slight overrepresentation of females. The University is 47%

female while the survey was 55% female. For Major’s, the largest representation was

from LAS students at 39%, then Engineering at 24% then General studies, Business and

Agricultural studies all made up 8% as well. University of Illinois is made up of 41%

LAS, 17% Engineering, 10% business, 6% General studies and 8% ACES. We can

clearly see there are no large biases in response rate and major or year in school.

       The university survey came out to be a good representation of our campus;

unfortunately, it was more difficult to recruit a proper sample for our focus groups. Of the

14 people we conducted focus groups with, all were men. We had 0 freshmen, 3

sophomores, 2 juniors and 9 seniors. Each focus group was held with students who had

loans. The original intent was to have a forth focus group with students without students

loans to be used as a comparison. Although there was room for improvement, we still

gained value from the discussions. Of course, it would have been better to have half the

sample made of females, we had to do the best we could with the low willingness of



Quantitative Results from the survey

       Out of the 274 students surveyed, roughly 46% responded that they had a loan.

Table 1 shows a breakdown of the loan amounts. Part of our research question was to see

if tuition loans were an issue that students worry about. In order to get some data on this

topic, a question on the online survey asked “to what extent are you worried that you will

not be able to pay off your student loans?” Students were given the option of ‘very

worried’, ‘somewhat worried’, or ‘not worried’. Out of the 127 students who had a loan

14% were very worried, 48% were somewhat worried, and 37% were not worried. Table

2 provides a cross table that compares the amount of the loan and the extent to which the

student is worried about paying the loan back. Although our data suggests that not that

many students are worried about paying their loans back, the majority of students who

answered that they were “very worried” about paying off their loan had a loan amount of


       Our survey also gave us some results on if having a loan affects consumption.

The question “which of the following best describes how you think having student loans

affects your consumption now?” was asked and students had the option of replying with

‘It increases consumption a lot’, ‘It increases consumption by a little’, ‘No effect’, ‘It

Decreases consumption by a lot’, and ‘It decreases consumption by a little.’ The results

of this question are illustrated in Table 3. The majority of students who answered this

question (57.65%) said that having tuition loans had no effect on their consumption.

22.45% students responded that it decreases their consumption by a little. In order to find

out if the loan amount played a role in how students consumption is affected, we made a

cross table with both variables. The results are provided in Table 4. Generally it seems

that loans do not significantly affect student’s consumption. Based on the data, students

who notice a decrease in consumption also happen to have a student loan. As the loan

amount gets larger the data suggests that students decrease their consumption

       Students’ employment was another factor that was included in the survey. The

employment results are included in Table 5. 52.55% of students surveyed did not hold a

job. Part time jobs were most common among students and 36.13% of students said they

currently held a part time job. Table 6 shows the relationship between having a job and

having a loan. There doesn’t seem to be any relationship between the two variables.

Less than 2% of students surveyed had a full time job. The survey also considered

students who worked in the summer of 2008. 81.75% of students surveyed worked in the

summer of 2008. There was not much of a correlation between having a loan and

working in the summer of 2008. 47% of those who worked in the summer had a student

loan, while 53% did not. Of those that did not work in the summer, 44% had a loan while

56% did not.

       Credit card information was another aspect of student spending that was included

in the survey. Based on the survey results, students on average had one credit card. The

students were asked if they were in credit card debt and to what extent, based on a

numerical range. The results of this question are provided in Table 7. 88.83% of

students answered that their credit card debt was less than $100, while 3.72% of students

said they had credit card debt of over $1,000. 6 out of the 7 students who responded that

they were in credit debt over $1,000 also had a student loan. In addition, students who

were in credit card debt of $500 or greater were also more likely to have a student loan.

Table 8 shows a cross table of credit card debt and whether or not a student has a loan.

       Another component of our research dealt with future expectations and plans after

graduation. When asked questions about their expectation of earnings after graduation,

the average amount students responded with was $50,249 with a minimum amount of $0

and maximum amount of $250,000. On the topic of plans after graduation, 49.8% of

students planed to work full time, 26.65% are planning on getting a masters degree,

14.13% plan on getting a Ph.D or M.D., 4.46% planed on going to law school, and 5.95%

answered “other.” This information is provided in Table 9.

Qualitative Results from Focus Groups

       The participants in the focus groups were all students, varying age and

demographics, but all three focus groups conducted had participants who had student

loans. In the three focus groups conducted, we asked them several questions about their

student loans and how it affects their consumption as college students.

       One of the first questions we asked our participants was if debt generally is a

problem for college students. Many people agreed that it was a problem, but it is very

necessary to take to be able to afford a good education. For many of our participants,

debt was necessary because it was an investment in their education creating higher

potential future earnings justifying taking on debt. One participant said, “debt is just

something Americans as a whole learn to live with, like going to college, buying a

house—got to take out a loan.” In general, our findings found that debt was a necessary

part of life and there is no way getting around it, however, there are good and bad debt

such as credit card bills versus student loans. Student loans were considered as good debt

and credit card debt seemed to be unnecessary at times because it is so easy to round up

massive credit card bills that often take years to pay off because of the high interest rates.

       One of the questions we asked students, were the priorities of paying off their

student loans. Our respondents expressed a sense of urgency to pay off their debts. One

student said, “Mostly it will come down to is how fast you can start paying it back. So

don’t spend a lot. Cut back your lifestyle.” The respondents were all anxious to pay off

their loans so they would not accrue high amounts of interest. Additionally, the

participants agreed that their spending is of high concern, however, they were not that

inclined to set budgets but rather constraints on the way they spend money. Most of our

participants had some sort of job, whether during the summer, winter break, or during the

school year. We saw that most of money generated from these time periods is used to

finance personal spending, such as going out to eat or a movie, versus their fixed costs of

rent and students loans. One participant said, “My paycheck in the summer was 75%

savings.” Many large fixed expenses such as rent and utilities, tended to come from

student loans or parents support. Students that had summer jobs, tended to try to save as

much as they could for the school year.

       Budgeting was another issue that we asked our participants and we found that no

one had a structured budget, rather a general basis of spending. One participant summed

this general finding with this response:

                I don’t have anything written down, I just try to keep the
               general track of what I have in my bank account, just try to
               stay within a specific amount. I don’t think any college kid
               has a real good budget; most are probably like me that just
               have a general idea of what is too much and what’s okay.

Participants do not write down expenditures or rarely kept track of spending. Students

tended to create an allotment of money and make that last as long as possible by being

frugal or finding ways to cut back on expenses. “I don’t really have a budget, it’s more

of a restriction. If I go out a lot one week and go grocery shopping, then ill kind of lay

low for awhile before I start spending a lot of money again.”

       Our most important findings were our participant’s student loans, and their

general feelings about how it affects them currently and their ability to pay off their debt

in the future. As we mentioned earlier, students feel the urgency to pay off their student

loan as fast as possible out of college, but when asked if any of their current income goes

towards loan payments, most participants responded they just will pay back their loans

after college and current income is meant for discretional use. “I don’t really pay much

attention to my loans, I am just going to deal with it after college when it’s over,” seems

to be the consensus among our focus group individuals. Student loans to our participants,

even with varying ages of individuals, all agreed that their student loans were not of

current concern and are only a problem after graduation.

       With the participant’s student loan repayment in mind, we then asked the

individuals about their current consumption compared to if they had no loan. Our

findings have been that a student’s loan does not affect on how they currently consume

daily normal goods and their routine purchases. “I really think for me personally to fret

about how much money I’m spending is a waste of energy because I’m going to spend X

amount of dollars to live here and enjoy it.” We found overall, that student loans do not

affect every day purchases like groceries, movies, going out, and other nominal

purchases. However, some participants did express that if they did not have a loan they

would most likely make big ticket purchases such as a car or TV that they could not

normally afford because of their loan.

       Finally, we asked our participants about their future expected earnings and how

the current economic situation is affecting them. For many of the participants in the

focus groups, we found that the younger students, freshmen and sophomores, tended to

be less worried about finding a job after graduation because there is more time for the job

market to turn around. However, for juniors and seniors, there was more concern. One

participant said, “I’m worried about the future and landing a secure job. So I can’t be

spending all the money I have now…so I’m going to play it pretty conservative now.”

For the participants without a job lined up, there was more concern because without a

salary and steady job security, those participants are preparing to expect the worst.


       Based on our findings from our focus groups and online surveys, we have come to

the conclusion that while in college students are not particularly worried about their

loans. The majority students who responded to the online survey were not worried about

their loans, by a large margin. In addition to that, from our focus groups most of our

participants expressed that student loans were not something they would worry about

until after they graduated. It was interesting to see that as the amount of loans increase

there was somewhat of a correlation between being worried or not. This shows that while

students are not particularly worried about their loans it is something that they somewhat

think about and have in the back of their minds. We found that students were quick to

mention factors that affect how they will pay back their loans after school but no one had

an active plan to currently begin payments.

       Another main topic of our research was to examine the effect of loans and current

student consumption. As we predicted and according to our online survey, many of the

students responded that student loans do not slow down current consumption. However,

there is a slight connection between people having high amounts of student loans and

decreased consumption but nothing that lead us to believe that these two variables are

strongly correlated. As mentioned in the focus group results, when asked if students did

not have loans and whether or not it affects their consumption, it does not affect their

short term consumption. Some participants cited minor spending changes in luxury

goods if they had no student loans.

       One more topic of our research was to examine student loans and current

employment. Both our online survey and focus groups indicated that having a part time

job is mainly for discretionary spending and is not used to pay off student loans.

Students that have a part or full time job are not more likely to have student loan which

disproves one of our hypotheses that students with a loan are more likely to hold a job.

Perhaps some reasons for this is that tuition is so expensive it is impossible to finance

their way through this university with a typical college student job. The majority of

students surveyed responded they did not have a job and is most likely because students

are more focused on completing their degree and do not want any outside distractions.

       The relationship of credit cards and student loans was another topic we addressed.

Our hypothesis was that students who had a loan would be more inclined to be in credit

card debt and have higher monthly balances. However, most students that responded to

our survey were not in any kind of dangerous credit card debt. In fact, 21 out of 188

respondents had credit card debt greater than $100. Our hypothesis was partially correct

because the majority of students who were in high levels of credit card debt also had a

student loan.

       One of the reasons we originally thought that students in college were not worried

about their loans was because they had high expectations of future wages. Our reasoning

was correct as our online survey indicated that the average expected salary was $50,249.

However, during our focus groups some of our participants expressed worries about the

job market and were very pessimistic about earning the salaries they expected. On the

topic on the current economic crisis, more students responded on getting secondary

higher education. Only about 50% of students planned on working full time out of

college and 25% are getting masters. The high amounts of students getting secondary

higher education maybe due to the worries of the job market and way to wait out the

current recession.


       Overall, our research provided insight and allowed us to make some implications

about student loans and spending habits, however, we did encounter limitations to our

research. It was difficult to recruit strangers to take part in focus groups. We believe that

our budget of $100 limited the incentives we could have offered students. Perhaps with

more funding we could have made the discussions more appealing and would have

experienced a higher response rate. In our online survey, respondents were asked to fill

out the survey at their own time expense, and there was no incentive such as a possibility

of winning $50, which could have raised our response rate from 8% to a higher

percentage. Of the surveys we did receive, we had a large representation of international

students, which were not useful results. Also, many students left answers incomplete

which made some analysis difficult. Some students even contradicted their own responses

in the survey. For example, some students said they didn’t have a loan, but then answered

questions about how they were worried about paying them back, or giving additional loan


       In addition, when recruiting for our focus groups, we had a large amount of

surveys filled out and many respondents seemed enthusiastic about attending our focus

groups. However, when we emailed them with a time to meet, we had very low response

rates and not enough respondents were willing. Since we used our focus groups with

acquaintances, our focus groups were not a proper random sample of the university.

Since we used the snowball approach to recruitment, we were limited to conducting focus

groups with males which could have biased some responses.

       Another problem we encountered was finding information pertaining to private

student loans. The information we found on student loans came from the financial aid

services and did not have information on private loans since private loans are set up

between a student and another bank or lending company. This would make the average

student loan data we found to be lower than what it would be because of the lack of

representation on private loans. Additionally, in our online survey students were given a

range for their student loans which made them hard to average. Thusly, it was impossible

to find the average student loan from the survey and information available from the



        Although we ran into some challenges while conducting our research such as

difficulties recruiting for focus groups and less than desired amounts of online survey

participants, we were still able to draw a few conclusions about student loans and

spending. We found that students are not particularly worried about their student loans

while attending college. It was also found that a large increase of student loans only

decreases spending by a small amount, and does not increase the likelihood of holding a

job. In addition, students have a high expectation of future earnings and use that as a

justification for current consumption therefore viewing their debt as non current issue.

Because of this, students want to be able to pay off their student loans however they do

not have a plan or budget to be able to pay off their loans earlier than expected.

       This research has implications towards students on this campus because students

are not in a particular hurry or have a set plan to pay off their loans. Students generally

accept the fact that they are going to be in debt. The rising cost of tuition has become so

expensive that most students are forced to take out extra private loans to finance their

way through school. Americans are so in debt in general and have a negative net savings

rate and the high cost of education is making this problem worse. Higher education is

now an investment towards an individual’s lifetime earnings. Authors like Anya

Kamenetz argue that higher education is a public good and should not be a private

investment. We feel that policies need to be in place to help students avoid such high

amounts of student debt, whether through more federal funding, more grants and tuitions,

or lower tuitions. More research needs to be done to figure out new policies to alleviate

financial pressure on students.


Kamenetz, Anya. Generation Debt : How Our Future Was Sold Out for Student Loans,
Bad Jobs, Nobenefits, and Tax Cuts for Rich Geezers--and How to Fight Back. New
York: Riverhead Trade (Paperbacks), 2007.

Krueger, Richard A., and Mary Anne Casey. Focus Groups : A Practical Guide for
Applied Research. Minneapolis: SAGE Publications, Incorporated, 2000.

Williams, Jeffrey J. "Student Debt and The Spirit of Indenture." Dissent (2008): 73-78.

APPENDIX A: Survey Invite
Subject line: Let your voice be heard!

Invitation to participate in an online survey of University of Illinois undergraduate

Hi! We are students in ACE 398. As part of our course requirements, we are conducting
an online survey of University of Illinois undergraduate students. The survey covers the
topics of your spending on food and textbooks, your use of the new ARC, how tuition
loans affect your spending, and how you chose to attend the University of Illinois.

So, how will we use the information we collect from you? In addition to our course
papers, we plan to write up short papers with our findings. Administrators at the
university are very interested in our research. You could benefit, too, as we can use our
findings to inform students about how to save on textbooks and food.

Please help us out and click on the link below to access our online survey. It shouldn’t
take you more than 30 minutes to complete, and it would mean a lot to us.

<link here>

Thank you so much!

<Student names here>

APPENDIX B: Online Survey
9. Do you currently have a job?

       Yes, part-time on campus

       Yes, full-time on campus

       Yes, part-time off campus

       Yes, full-time off campus


Please put "0" if you do not work during the school year.

10. How much do you earn each week in your job during the school year on average?

11. Did you work during the summer of 2008?



12. If yes, how much did you earn on average per week during your summer 2008 job?

13. Which of the following sources of income do you have currently? Check all that apply.

       Current job

       Past summer job/internship

       Allowance/family help

       Student loans

       Student scholarships

       Link card


14. What is your best estimate of the total income you received from October 1,2007 to September 30, 2008? Be sure to include
earnings from jobs as well as interest earnings or dividends.

New page

15. Approximately how much is the annual income of your parent(s)? Give your best guess.














16. Do you have a student loan?



17. If yes, how much will you have in student loans when you graduate?

       $0 - $4,999

       $5,000 - $9,999

       $10,000 - $19,999

       $20,000 - $29,999


18. If yes, have you started to pay any of your loans?



19. How many years do you think it will take for you to pay off your loans?

20. Which of the following best describes how you think having student loans affects your consumption now?

       Increases consumption by a lot

       Increases consumption by a little

       Doesn't affect consumption now

       Decreases consumption by a little

       Decreases consumption by a lot

21. To what extent are you worried that you will not be able to pay off your student loans?

       Very worried

       Somewhat worried

       Not worried at all

New page

22. Do you receive any kind of financial aid?



23. If yes, how much do you receive per year?

24. How much is your total tuition and fees per year?

25. How much do you spend on room and board per year? (or put down your spending on rent and utilities, if applicable)

26. How do you pay for your tuition? (Check all that apply)


       Other relatives

       Government aid


New Page

27. How many credit cards do you have?

28. If you use credit cards, what are your average monthly bills?

       $0 - $49.99

       $50 - $199.99

       $200 - $499.99

       $500 - $999.99

       $1,000 +

29. If you have outstanding bills, how much do you owe towards all your credit cards?

       $0 - $99.99

       $100 - $199.99

       $200 - $499.99

       $500 - $999.99

       $1,000 +

New page

30. What do you plan to do in the year after graduation? (choose only one option, the one you are most likely to pursue)

       Pursue a Masters degree

       Pursue a Ph.D. or M.D. degree

       Pursue a law degree

       Work full time


31. What do you expect to earn per year in your first full time job?

New page

78. What is your gender?



79. What year are you in school?





80. What College are you currently enrolled in?

       Agricultural, Consumer, and Environmental Sciences

       Applied Health Studies




       Division of General Studies



       Fine and Applied Arts

       Liberal Arts and Sciences



81. What is your major?

Please refrain from abbreviations.

82. What is your age?

83. Are you an international student?



84. If yes, what country are you from?

New page

88. What is the highest level of education completed by your mother?

       Less than high school

       High school graduate

       Some college

       Bachelor's degree (B.A. or B.S.)

       Some graduate school

       Advanced degree (M.A., Ph.D., J.D., M.B.A., M.S., M.D.)

       Don't know

89. What is the highest level of education completed by your father?

       Less than high school

       High school graduate

       Some college

       Bachelor's degree (B.A. or B.S.)

       Some graduate school

       Advanced degree (M.A., Ph.D., J.D., M.B.A., M.S., M.D.)

       Don't know

90. What is your marital status?






Please write to 2 decimal places.

91. What is your grade point average (G.P.A.)?

92. What is your race/ethnicity?

       African American

       Asian American



       Native American

APPENDIX C: Recruitment Survey

The following survey is designed for specific use on a research project for ACE398
designed to determine the relationship between spending habits of college students and
tuition loans. This survey complies with Ethnography of the University Initiative

Name: __________________________________
Email Address:
Cell Phone Number: (_____)___________________

What year are you? (circle)
Freshman                      Sophomore               Junior                     Senior

What is your college? (circle)
Business              ACES                  Engineering               FAA

LAS                   AHS                   Education                 COM

DGS                   Aviation              Nursing                   Other- Graduate

If you are a senior, are you currently seeking a full time position upon
graduation? (circle)

Yes           No

Do you have a loan to finance your tuition? (circle)
Yes           No

If yes, how much is your loan annually? (circle)
< $1000       $1,000-$5,000          $5,000-$10,000            $10,000-$20,000            >

If no, how do you finance your tuition? (circle)
Parents                                     Financial Aid

Other (please specify):____________________________

Do you currently have a job? (circle)
Yes            No

If chosen would you be willing to participate in a focus group that will meet one time for
approximately an hour? Students will be compensated for their time. Details to follow

Yes                   No

When is the best time for you to meet? (Check all that apply)
            Sunday     Monday     Tuesday    Wednesday Thursday Friday           Saturday

APPENDIX D: Information Form


Hi. Our names are Peter Comes, Joe Franzwa, and Everett Sommer, and we are students
in ACE 398, a research methods class that is part of the Ethnography of the University
initiative here at the University of Illinois. ACE 398 is taught by Professor Mary Arends-
Kuenning. We are conducting a research project that examines student loans and their
effect on spending habits of college students.

We are distributing a contact information form to find participants in focus group
discussions about tuition loans and spending habits. If you are interested in participating,
please fill it out and return it to us. The focus group discussions will take about 1 to 1.5
hours of your time. The information you provide will be kept confidential.

If you do participate, you will be provided with refreshments.

If we choose you for a focus group, we will contact you and send you a survey and a
consent form. Please bring the survey and consent form to the focus group discussion
location. If you do not participate in a focus group, we will destroy your contact
information form.

Your participation in this research project is entirely voluntary. Your participation in the
study will not affect your grades or academic standing in your program in any way. You
will not be penalized in any way if you do not participate. There are no known risks in
this study beyond those of everyday life. However, it is possible that we might
sometimes talk about personal matters related to your spending habits or time use, and
you might therefore feel uncomfortable having the discussion taped. You don’t have to
answer any questions you don’t want to and you can stop the discussion to ask questions
at any time. Also, we can stop the tape at any time if there are portions of the discussion
you prefer not to be recorded.
We ask that all participants in the focus group respect the privacy of the session and do
not repeat what other participants say when outside the focus group. However, we cannot
guarantee that all participants will respect other participants’ privacy and confidentiality.
If you have any additional questions, Professor Arends-Kuenning would be happy to
answer them. She can be reached by phone at 217-333-0753 or e-mail at Should you have any questions concerning research subject's rights,
you can contact the University of Illinois Institutional Review Board Office, 1-01-(217)
333-2670; e-mail The Institutional Review Board is the office at the
University of Illinois responsible for protecting the rights of human subjects involved in
studies conducted by University of Illinois researchers. You are welcome to call collect
if you identify yourself as a research participant.
We hope that you will volunteer to participate in our research project.

APPENDIX E: Focus Group Invite


We are writing to you in response of a survey that you recently filled
out. We are conducting focus groups to aid us in our research that
deals with student loans and their effect on spending habits. Your
participation will tremendously help us with out project.

The group should take no longer than an hour. Pizza and refreshments
will be provided and participants will receive a $10 gift card to Best

The times we have set are as follows:

Wednesday, November 19 at 6:30 PM in 313 Mumford Hall
Thursday, November 20 at 6:30 PM in 313 Mumford Hall

Please respond to this email if you would like to participate and give
the time that works best for you.

Thank you in advance for your participation,

Peter Comes

Peter Anthony Comes
University of Illinois
Consumer Economics and Finance

APPENDIX F: Data Results from Online Survey

                              Table 1

                   Break down of Loan Amounts                                                 Relation
Amount Student Loan Frequency                 Percentage
$0-4,999                                  83                           38.25
$5,000-$9,999                             20                            9.22
$10,000-$19,999                           45                           20.74
$20,000-$29,999                           23                            10.6
$30,000+                                  46                            21.2
Total                                    217                            100

                                        Table 2

           Relationship between Loan Amount and being worried about loan
Amount of Loan      Very Worried        Somewhat Worried               Not Worried    Total
$0-$4,999                           0                            6               56     62
$5,000-$9,999                       0                            8               12     20
$10,000-$19,999                     4                           21               20     45
$20,000-$29,999                     4                           13                6     23
$30,00+                            11                           23               12     46
Total                              19                           71              106    196

                           Table 3

             How Tuition Loan affects consumption

Effect on Consumption        Frequency            Percentage
Increases a lot                             5                   2.55
Increases a little                         13                   6.63
No effect                                 113                  57.65
Decreases a little                         44                  22.45
Decreases a lot                            21                  10.71
Total                                     196                   100

                                            Table 4

                                Effect on Consumption based on Loan amount
                Increases   Increase            Decreases   Decreases
Amount of       Consumption Consumption No      Consumption Consumption
Loan            A lot       a little    Effect a lot        a little    Total
$0-$4,999                 0           1      55           5           2       63
$5,000-$9,999             0           1      14           5           0       20
$19,999                   3                4          18         13           7   45
$29,999                   0                4           8          8           3   23
$30,00+                   2                3          18         13           9   45
Total                     5               13      113            44          21   196

                         Table 5

                  Employment Break Down

Job-Type                      Frequency         Percentage
Part-time on campus                        99            36.13
Full-time on campus                         2             0.73
part-time off campus                       27             9.85
Full-time off campus                        2             0.73
No Job                                    144            52.55
Total                                     274              100

                           Table 6                                                    Table 7

    Relationship between having a loan and having a
                         job                                          Breakdown of Credit Card Debt Amount
                                                                   Credit Card Debt
                                        Has Loan                   Amt.                Frequency Percentage
    Job-Type                           Yes          No             $0-$99.99                    167         88.83
    Part-time on campus                        48    51            $100-$199.99                   4          2.13
    Full-time on campus                         1     1            $200-$499.99                   4          2.13
    Part-time off campus                       17    10            $500-$999.99                   6          3.19
    Full-time off campus                        2     0            $1000+                         7          3.72
    No Job                                     59    85            Total                        188          100
    Total                                     127   147

                             Table 8                                                             Table 9

 Relationship between Credit Card Debt amount and Having a
                            Loan                                                          Plans After Graduation
                                         Has Loan
Credit Card Debt Amt.                        Yes    No Total                      Plans         Frequency Percentage
$0-$99.99                                     79     88    167                    Masters              69      25.65
$100-$199.99                                   2      2      4                    PhD or MD            38      14.13
$200-$499.99                                   2      2      4                    Law                  12       4.46
$500-$999.99                                   5     1         6                  Job                 134           49.81
$1000+                                         6     1         7                  Other                16            5.95
Total                                         94    94     188                    Total               269            100

          APPENDIX G: University of Illinois Student Loan Info

                                                         % of
                                                         Graduating    Average
                                                         Seniors Who   Student Loan
          Number of                   Number of          Borrowed      Debt of
          Graduating                  Student   %        Student       Graduating     %
Year      Seniors        % increase   Borrowers increase Loans         Seniors        increase
2003-04          5,785       ---          2,754     ---          48%   13,494.00        ---
2004-05          6,535    12.96%          3,219   16.885%        49%   14,776.00        9.50%
2005-06          6,494     -0.63%         3,297   2.423%         51%   15,641.00        5.85%
2006-07          6,896     6.19%          3,500   6.157%         51%   17,058.00        9.06%
2007-08          6,892     -0.06%         3,478   -0.629%        50%   17,938.00        5.16%
          Net increase       18.47% Increase      24.836%              net Increase    29.57%

           Year           Borrowed     % Increase
           2003-2004        83,434,981      ---
           2004-2005        97,997,807  17.454%
           2005-2006       111,372,929  13.648%
           2006-2007       121,824,395   9.384%
                          Net Increase    40.487%


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