Student Debt, Gender and Class

DENVER -- At a time of rising public concern about student debt, sociologists are arguing that there is not a single pattern of borrowing, but that there are important distinctions in borrowing behavior by gender, class and other factors that illustrate how the lack of funds to pay for college is affecting particular groups in different ways. These patterns, scholars argued in sessions here at the annual meeting of the American Sociological Association, threaten to limit educational attainment, and the ability of the United States to meet goals for having a larger share of the population earn college degrees.

Among the papers were one showing that men appear to have a lower tolerance for borrowing than do women, and another showing that borrowing rates among middle-class families are greater than those of families on either end of the wealth extreme.

Gender and Debt Tolerance

One paper -- by Rachel E. Dwyer and Randy Hodson of Ohio State University and Laura McCloud of Pacific Lutheran University -- examined the debt levels at which male and female students become more likely to drop out of college than to finish their degrees. The paper is based on data from the National Longitudinal Survey of Youth, which tracked thousands of students across the country on a number of factors, including college enrollment and completion and borrowing. The researchers were able to control for issues such as wealth, high school preparation and other characteristics, so that the focus could be on borrowing.

Dwyer, who presented the paper here, said that it was particularly important to examine the way debt may discourage college completion because the United States appears to be "doubling down" on the strategy of relying on debt to finance higher education. And she said that research on borrowing (but not focused on student loans) has demonstrated that men and women make different choices about borrowing. While not arguing that there was evidence for a causal relationship between the two, Dwyer also noted a "coincidence" that at the same time that the United States started to favor loans over grants as a means of providing college aid, men stopped being the majority of college students.

In her talk here, Dwyer drew attention to how the paper distinguishes between moderate and large debt burdens. She argued that at reasonable levels, debt is "a resource" that allows students to finish programs. But at higher levels of debt, the loan burden appears to encourage students to drop out, as they are wary of borrowing more to finish a program. This trend is particularly dangerous to students, she noted, as those who drop out will still have the debt but will lack the degrees that they hoped would provide them with income to repay the debt.

The researchers compared the data to look for the point at which more debt has a negative as opposed to positive impact on the likelihood of completion and found different average "inflection points" for male and female students. The debt level at which male students are more likely to drop out than complete is $12,426, while for women the figure is $14,620, suggesting that female students have a higher tolerance for debt.

In some ways, the researchers argue that the men and women are behaving like "rational actors" in that the salaries men and women could expect without a college degree have (historically) favored men. So women historically have seen a larger gain from a college degree than have men, at least in initial earnings power, even if men earned more on average than women. And that would be a strong motivation for women to be willing to take on debt.

An audience member challenged that idea, however, saying that it could hardly be rational in today's economy for men or women to drop out at those levels of debt when perhaps accepting some more debt would allow them to get much better jobs because they would earn degrees.

Dwyer agreed, and said in the question period that she thought the data pointed to the need for better advising for students. She said that her research has led her to learn more about how financial counselors at Ohio State work with students, and she said that she has been impressed with their knowledge. "They are whizzes but they can't talk to every student."

When "students talk to our financial advisers, they make good decisions," she said. But this isn't what happens with every student. Dwyer said she believed it is the students who are already savvy about finance who may be more likely to seek help from a university or who have the best sources of information from family members. But too many students nationally "don't talk to anyone at all" when they make their decisions.

Many students engage with lenders largely online, and have no basis to decide such basic questions as how much of what has been offered as a loan to accept. In the same way that the scarcity of high-school guidance counselors is hurting those at low-income higher schools, the lack of good financial guidance is limiting opportunity, she said.

Middle Class Burdens

A paper being presented today uses the same database but focuses on class to find that middle class families are incurring significantly more debt than others. Notably, the paper defines the middle class as those whose families earn from $40,000 to $59,000 annually -- a social science definition that is much lower for middle class than that used by many elite colleges and universities when describing their assistance for middle-class families, which are frequently defined as those earning quite a bit more.

The study found that among the 4,414 students who were tracked through 2009, the average student loan debt burden was $22,000. But those who were in that middle income category had $6,000 more in debt, on average, than did those from families with income under $40,000, and $2,000 more than those with family income between $60,000 and $99,000.

Further, the middle-income students racked up $12,000 more in student loan debt than did those from families with income between $100,000 and $149,000 per year, and upwards of $17,000 more in student loan debt than those from families earning more than $150,000 annually.

Jason N. Houle, the author of the study and a Robert Wood Johnson Health and Society Scholar at the University of Wisconsin at Madison, said that the data show that for all of the concern about lower-income borrowing and higher income borrowing, there is a significant "middle class squeeze" issue that needs attention. And that squeeze starts at $40,000 in family income.

He said that there is "a safety net in place" for those from very low incomes, but not for others, and that this group needs ways to avoid "a disproportional burden" of debt.