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Helping or Hindering? The Effects of Loans on Community College Student Persistence

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Abstract

More community college students are taking out loans than ever before and their median debt levels are increasing. This trend is disconcerting because community college borrowers are overrepresented among loan defaulters and those who dropout without having earned a degree. While not without criticism, a growing number of community colleges are choosing not to participate in the federal student loan programs, citing a desire to protect their students from future financial hardships. This study used data from the Beginning Postsecondary Student (BPS:04/09) survey and propensity score matching techniques to examine the effects of loans on persistence for students enrolled in associate’s degree programs. Results indicated that borrowing during the 1st year had a positive effect on persistence at the end of year one, but had a negative effect on persistence measured three and 6 years after initial enrollment. As community college students assess their prospects for degree completion and the return on their financial investment in higher education, we hypothesize that borrowers are more likely to become dissatisfied with their investment decision than non-borrowers and choose to dropout rather than take on additional loan debt. Findings from this study suggest the need to carefully reconsider current policies and practices regarding loan use among community college students.

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Notes

  1. All unweighted n’s in this study are rounded to the nearest ten per NCES data security guidelines.

  2. At the 6 year time point, a small number of students in the sample had earned their bachelor’s degree from the community college. This reflects the fact that some community colleges now award their own bachelor’s degrees.

  3. The steps required for students to take out a federal loan are available at https://studentloans.gov/myDirectLoan/counselingInstructions.action.

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Acknowledgments

An early version of this paper was presented at the 2013 Association for Institutional Research (AIR) Forum in Long Beach, California. The authors would like to thank participants of the Institute for Higher Education Law and Governance (IHELG) 2012 Finance Roundtable and two anonymous reviewers for their very helpful comments on earlier drafts of this paper. Any omissions or errors are our own. This study is based upon work supported by the Association for Institutional Research, the National Center for Education Statistics, the National Science Foundation, and the National Postsecondary Education Cooperative under the Association for Institutional ResearchGrant Number (#RG12-54).

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Authors and Affiliations

  1. Department of Educational Leadership and Policy Studies, University of Houston, 427 Farish Hall, Houston, TX, 77204-5019, USA

    Lyle McKinney

  2. Department of Educational Psychology, University of Houston, 491 Farish Hall, Houston, TX, 77204-5019, USA

    Andrea Backscheider Burridge

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  1. Lyle McKinney
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  2. Andrea Backscheider Burridge
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Correspondence to Lyle McKinney.

Appendix

Appendix

See Fig. 1 and Table 4.

Fig. 1
figure 1

Region of common support for propensity score analysis

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Table 4 Balance check for propensity score stratification
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McKinney, L., Burridge, A.B. Helping or Hindering? The Effects of Loans on Community College Student Persistence. Res High Educ 56, 299–324 (2015). https://doi.org/10.1007/s11162-014-9349-4

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