Digest No. 06 - June 2019

Student Loans and College Graduation

Zhan, M., X. Xiang, and W. Elliott III. 2018. “How Much Is Too Much: Education Loans and College Graduation.” Educational Policy 32 (7): 993–1017.


The purpose of this study was to offer advice concerning the relationship between educational loans and graduation rates and how this relationship varies based on race and ethnicity. The authors appropriately used discrete-time survival analytic techniques to determine the borrowing patterns of 3,445 individuals across 15 survey administrations. Limited by their secondary data source (the 1997 National Longitudinal Survey of Youth), the authors were unable to pinpoint the type of loan (subsidized, unsubsidized, state, federal, or private) and its relationship to graduation rates, but they were able to identify the amount borrowed that seemed to tip the scales in favor of not completing college. In short, educational loans shared a positive relationship with graduation rates, but only up to a point: $19,753. Beyond that figure, the relationship between educational loans and graduation rates began to weaken for everyone, including students who identified as black or, in the authors’ language, “Hispanic” (p. 993).


Two findings from this study were of particular interest. The first involved the curvilinear relationship between borrowing and completion. From the authors’ analyses, there came a point where borrowing too much could begin to compromise completion: For the overall sample, this figure came to about $20,000. Keeping in mind that these data were collected for a specific cohort of students (those born between 1980 and 1984 and who reported attending a four-year college or university), results suggested that completion was positively associated with borrowing up to $20,000, but negatively associated with borrowing over that figure. This trend held even after controlling for a range of student characteristics, college experiences, and financial resources.

The second point of interest involved how this tipping point varied based on race and ethnicity. For black students, the tipping point was about $21,000 while for Hispanic students, the tipping point was about $24,000. The authors scrutinized these findings, given their expectation that minority students would have a lower borrowing tolerance threshold than those of white students. They suggested that a more current and robust data set might yield different results, so “we must be cautious interpreting these findings” (p. 1009).


When does borrowing inhibit completion? Given that high-dollar debt has recently been defined as “$100,000” or more per student borrower (p. 1011), the finding that just about $20,000 is the tipping point where borrowing becomes a hindrance to completion is concerning. This level is the average amount of debt for graduates of private colleges and slightly more than the level for graduates of public institutions. Although the authors encourage caution in interpreting their findings, this may serve campus administrators as a descriptive data point and a means for helping their financial aid officers counsel student borrowers.
The study also linked borrowing with completion practice, particularly for minority students. The authors conceded that they “found little evidence that having educational loans is helping reduce racial and ethnic disparities in college completion rates” (p. 1011). This linkage highlights the necessity of thoughtfully designing completion practices to ensure that minority students in particular learn and persist. Too often, higher education stakeholders overly differentiate issues of affordability, access, and accountability. To students, these distinctions may not matter much; they just want to be able to afford college, learn something while in college, and complete a degree to get a better job and a better life. Ensuring that administrators and faculty members collaborate in designing comprehensive approaches may help both their minority students and other students persist.

About the Author

Min Zhan is a professor and associate dean for academic programs, School of Social Work, University of Illinois.

Xiaoling Xiang is assistant professor of social work at the University of Michigan.

William Elliott III is professor of social work and director, joint doctoral program in social work and social science, at the University of Michigan.

Literature Readers May Wish to Consult

Council of Independent Colleges. November 2018. “Student Debt: Myths and Facts.” Sixth edition.

Heller, D. E. 2008. “The Impact of Student Loans on College Access.” In The Effectiveness of Student Aid Policies: What the Research Tells Us, edited by S. Baum, M. McPherson, and P. Steele, 39–67. New York: College Board.

Hillman, N. W. 2014. “College on Credit: A Multilevel Analysis of Student Loan Default.” The Review of Higher Education 37: 169–195.