Taken for Granted? Effects of Loan-Reduction Initiatives on Student Borrowing, Admission Metrics, and Campus Diversity
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Taken for Granted? Effects of Loan‑Reduction Initiatives on Student Borrowing, Admission Metrics, and Campus Diversity Christopher Bennett1 · Brent Evans1 · Christopher Marsicano2 Received: 14 November 2019 / Accepted: 6 October 2020 © Springer Nature B.V. 2020
Abstract In recent decades, several dozen colleges and universities have instituted loan-reduction initiatives (LRIs), such as “no-loan” programs. Institutions frequently cast such initiatives as efforts to increase socioeconomic diversity on campus. Using a difference-in-differences analytic strategy with national institution-level data, we examine the effect of LRI adoption at 54 institutions on three sets of outcomes: student borrowing, admission metrics, and campus diversity. Our analysis suggests LRIs decreased institution-level borrowing rates at private institutions, with no detected change at public institutions. Consistent with stated program goals, LRI adoption increased the number of Pell Grant recipients at both public and private institutions. However, adopting LRIs at public institutions reduced racial/ ethnic diversity, suggesting possible trade-offs for LRI adoption in terms of student body diversity. Keywords Postsecondary education · Student loans · No-loan programs · Socioeconomic diversity · Racial diversity JEL Classification I23 · I22
Introduction Students from low-income backgrounds are underrepresented at 4-year colleges and universities in the U.S. (e.g., Baum et al. 2013), even after controlling for academic achievement (e.g., Astin and Oseguera 2004). This disparity is especially pronounced at the most selective institutions, where only 4% of students come from the lowest income quintile Electronic supplementary material The online version of this article (https://doi.org/10.1007/s1116 2-020-09615-7) contains supplementary material, which is available to authorized users. * Christopher Bennett [email protected] 1
Department of Leadership, Policy, and Organizations, Vanderbilt University, PMB #414, 230 Appleton Place, Nashville, TN 37203, USA
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Davidson College, Davidson, NC, USA
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Research in Higher Education
(Chetty et al. 2017). As a result, relatively few students from low-income backgrounds may receive the benefits linked to enrollment at a selective college, such as increased earnings (Card and Krueger 2002; Hoekstra 2009) and higher odds of graduate school enrollment (Eide et al. 1998). The socioeconomic stratification within higher education has remained persistent over time (Bastedo and Jaquette 2011), and is likely related to both real and perceived price barriers (Dynarski 1999). With growing media coverage of student loan debt, student borrowing in particular may be increasingly salient in students’ application and enrollment decisions. Indeed, two-fifths of high school seniors exhibit loan aversion (Boatman et al. 2017), presenting challenges for institutions seeking to enroll greater numbers of students from low-income backgrounds. In response, several dozen institut
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