Webinars from first part of eXtension webinar on student loans

1. Paying for College:
Student Loan Introduction and
NC2172 Research Overview
https://learn.extension.org/events/2080#.VSgoH00tGM8
eXtension Financial Security for All (FSA)
Community of Practice (CoP)
Barbara O’Neill, Ph.D., CFP®
Rutgers Cooperative Extension
oneill@aesop.rutgers.edu

2. Student Loan Overview:
Two Big Concerns
• Increasing frequency of use by students
– Going to college effectively means going into debt
for a majority of American college students
• Increasing outstanding student loan debt
burdens
– College graduates
– Those who do not complete a degree program
and lack an income boost to help repay debt

3. College is Expensive!
• 2003-2013: State funding for colleges decreased by
12% and median tuition rose 55% across all public
colleges
• Students have two methods of elasticity in response
to increased college costs
– Select a lower cost college to attend
– Graduate with more student loan debt
Source: Higher education: State funding trends and policies on affordability (December, 2014). Washington, DC:
Report to the Chairman, Committee on Health, Education, Labor, and Pensions, United States Senate. U.S. GAO.
Retrieved from http://www.gao.gov/assets/670/667557.pdf.

4. Student Loan Statistics
• In 2010, total outstanding student loan debt rose to over $800
billion, overtaking credit card debt for the first time, as well as
auto loan debt (only mortgages have a higher debt total):
https://www.aeaweb.org/articles.php?doi=10.1257/jep.26.1.165
• April 2015: Student Loan Debt Clock reports $1.3 trillion owed
– http://collegedebt.com/
• Average amount of debt owed by graduating students in 2013
was $28,400:
http://ticas.org/sites/default/files/legacy/fckfiles/pub/classof2013.pdf
• In 2012, 71% of all students graduating from 4-year colleges
had student loan debt
– http://ticas.org/sites/default/files/pub_files/Debt_Facts_and_Sources.pdf

5. More Student Loan Statistics
• Average cumulative debt of bachelor’s degree
recipients increased
– 9% between 2002-03 and 2007-08 school years
– 24% between 2008-09 and 2012-13 school years
– Graduates of for-profit colleges have higher amounts of
debt than those of public and private non-profit colleges
– http://trends.collegeboard.org/student-aid/figures-tables/average-
cumulative-debt-bachelors-recipients-public-four-year-time
• The monthly average student loan payment (2010
SCF data): $242
– http://www.brookings.edu/research/papers/2014/06/19-typical-student-
loan-debt-akers

6. Student Loan Impacts
On Students
• “Generation indebted”
• Opportunity costs (e.g.,
“crowding out effect”)
• Postponed savings, reduced
wealth accumulation
• Emotional distress
• “Living a postponed life”
(marriage, family)
• Career choices
• Stifled entrepreneurship
On Society
• Reduced/delayed home and
auto purchases
• Decreased/delayed family
formation
• More young adults living
with parents and impacting
parents’ finances
• Lifetime wealth loss impacts
(money that isn’t available to
be spent or invested)
• Stifled entrepreneurship

7. Taken Together, All of the
Data on the Previous Slides
Beg the Question…
• What were students and/or their parents
thinking when they made student loan
decisions?
• Did they fully understand the implications of
their student loan borrowing decisions?

8. NC 2172
• Multi-state research group composed of Extension specialists
and teaching/research faculty:
http://www.lgu.umd.edu/lgu_v2/homepages/member.cfm?trackID=15376
• 10/1/13-9/30/18 research theme: Behavioral Economics and
Financial Decision-Making and Information Management
Across the Lifespan
• In other words, how households make financial decisions
• Results will inform efforts to improve financial decision-making
• Three research topics: decisions about funding education
(student loans), retirement, and housing
http://www.lgu.umd.edu/lgu_v2/homepages/outline.cfm?trackID=15376

9. Student Loan Research:
Experimental Design
• Purpose: To measure participants’ attitudes and willingness
to take on student loans
• Online respondents were presented with a scenario describing
a young person who is deciding to either attend college or go
straight into the workplace
• Three different treatments were tested to determine if
additional information presented as a treatment (e.g., return on
educational investment) affects their determination of the
prudence of borrowing
• Participants were randomly assigned to one of three surveys
(treatments vs. control by Survey Sampling International (SSI))

10. Student Loan Research:
Focus Group Study
• Purpose: To understand decisions that students made with
regard to college selection and student loan borrowing
• Three rounds of data collection: two campus-based samples
and a sample via SSI
• Data collected via an online course platform that enabled
students to “talk” with one another
• Rich qualitative data indicating students’ decision-making
processes and their knowledge, thoughts, and emotions
related to student loan debt
• A journal article reporting research results is in progress

11. Focus Group Questions
• Question 1: How did you decide which colleges or universities to attend?
• Question 2: How did you feel about borrowing money for college?
• Question 3: What assistance/sources of help, if any, did you use before
making the decision to take out a student loan?
• Question 4: Tell me what you know about your loans.
• Question 5: How do you think your student loan debt will affect you
economically after graduation? Please explain. (Examples: your monthly
loan payment, ability to rent apartment, get a car; ability to buy a house or
how much house can be purchased, saving for retirement, starting an
investment program, maintaining a relationship that might lead to marriage).

12. Focus Group Questions
• Question 6: What factors influenced your decision to accept the type of
financial assistance you are using?
• Question 7: How has the amount of financial aid you’ve
requested/received affected the number of college credits for which
you’ve enrolled?
• Question 8: Thinking back to a time when you received a student loan
refund (i.e. borrowed funds remaining after tuition and fees were paid),
tell us how you or someone you know, used those available funds.
(Examples: saved for a future semester, invested the money, paid off
other loans, room and board, miscellaneous spending, etc.)

13. NC 2172 Team Student Loan
Literature Review
Refereed Journal Article
Cho, S.H., Xu, Y, & Kiss, D.E.(2015, March). Understanding
Student Loan Decisions” A Literature Review. Family and
Consumer Sciences Research Journal, 43(3), 229-243.
http://onlinelibrary.wiley.com/doi/10.1111/fcsr.12099/abstract
Examines theories related to student loan debt, effect of
student loans on college education, and effect of student loans
on post-school life circumstances

14. eXtension Student Loan
Web Page
• Includes information about student loans, the
Federal Student Aid (FSA) Financial Aid Toolkit, and
other FSA resources
• Will eventually include NC 2172 research briefs
http://www.extension.org/pages/72895/student-loans

15. Questions? Comments?
Part 2: Cindy Forbes Cameron from Federal Student Aid will
describe the resources in the Financial Aid Toolkit:
• Outreach resources such as fact sheets, videos, infographics, and
PowerPoint presentations
• Social media resources such as sample tweets, Facebook posts, and
blog posts
• Information on embedding videos and infographics
• Ideas for newsletter articles or e-mails to students