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How Washington low-income community college students finance their education during a recession: dependent & independent students’ choices to borrow, work &/or attend part-time. Rachelle Sharpe June 15, 2012 SFARN. Washington Student Achievement Council. Introduction.
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How Washington low-income community college students finance their education during a recession: dependent & independent students’ choices to borrow, work &/or attend part-time Rachelle Sharpe June 15, 2012 SFARN Washington Student Achievement Council
Introduction • WA State needs to educate more students at higher levels (HECB, 2008) • There are individual & societal benefits to postsecondary education • The “great recession” has led to higher tuition at a time when more students enroll • Many students attend community colleges (SBCTC, 2010) • More low-income students are enrolling
Problem Statement Indebtedness, working too much, and attending part-time are risk factors associated with low-income students. • Low-income students are more likely to be independent, work full-time & attend part-time (Berkner & Choy, 2008) • Increased work hours negatively impact academic progress (Horn & Nevill, 2006) • Research has not addressed directly why students choose to work, borrow &/or attend part-time in combination
Purpose of Study • Examine choices made by independent & dependent low-income community college students • Describe the students’ reasons reported for choice of work, loan &/or part-time enrollment • Expand knowledge for campuses and state policymakers • Tailor programs and policies to financial status
Scope of Study Survey of WA community college students enrolled Fall 2009 & Winter 2010 about their financing choices. • Assumptions • At least 5% would respond • Students would have access to a computer • The online survey would produce a complete data set • Students would report their decisions and be truthful • Limitations • Low-income students • Community college students • Patterns during a recession may differ • Delimitations • Removal of records: younger than 18, no email on FAFSA, attending a CC that doesn’t offer federal Stafford loans, or those included in the pilot study
Significance of Study • Policy makers will be able to affect social change if they better understand how & why certain financing options are chosen • Examining the financing strategies of low-income students during a recession improves understanding • Statewide strategies to address any patterns of over-use of finance options are suggested
Student Change & Student Demand Theories • Traditional student change theories review growth and development with limited consideration of diversity • Student demand researchers examine whether economic policies affect student choices • Price-response studies found (McPherson & Schapiro, 1991; St. John, 1990) • first-time attendance decisions were more responsive to aid than tuition • persistence affected by tuition & aid
Financial Decisions • Students face many decisions affecting cost (where, enrollment rate) & methods of financing • Working more than part-time & attending college part-time negatively affect persistence for low-income students (King, 2002) • Financial aid plays a role in the college choice process (Dongbin, 2004; Kim, 2004; Lillas & Tian, 2008) • Students who receive aid are more likely to persist (Heller, 2003; Fike & Fike, 2008; Wei & Horn, 2009) • Current recession has affected how college students choose a college & their ability to fund their education (College Board, 2009; HERI, 2010)
Risk Factors • Low-income students are less likely to study full-time (King, 2002) • Independent students withdraw at higher rates, tend to be older & work more than dependent students (Berkner & Choy, 2008) • Part-time attendance & working full-time are among several risk factors for low-income students progress to degree (Lee & Horn, 2009)
Loans, Work & Part-time • Full-time students working 25 or more hours per week were more likely to borrow (King & Bannon, 2002) • Low-income students who both worked part-time & borrowed performed better than those who only worked part-time (King, 2002) • Low-income students who did not work were less likely to attend full-time than the part-time workers (King)
Research Design • Non-experimental quantitative study using three phases to examine the patterns among the financing choices of low-income community college students • independent variables not controlled • students not randomly selected • no treatment in the study • Comparison of groups used rather than predicting relationships as there is no logical order among the variables (Johnson & Christensen, 2004) • Many confounding variables exist such as academic preparation or family obligations
Approach • Phase 1: Test for differences by financial status (independent or dependent) related to three different financing options (working, borrowing &/or part-time enrollment) • Phase 2: Focus on students who use working or borrowing as a finance option • Determine differences in level (low, medium, high) of each option
Research Questions • Are there any patterns in the differences by financial status for low-income community college students in the state of Washington related to the strategies that they use to finance their educations? • Are there any patterns in the differences among dependent and independent students who borrow based on their level of borrowing? • Are there any patterns in the differences among dependent and independent students who work based on their level of working? • What factors do students report as affecting their decisions to choose a financing option (i.e. whether to work, borrow and/or enroll part-time)?
Population & Sample • The 2009-10 State Need Grant (SNG) program serving 71,000 will be used to identify low-income students • filtered by age >18, email on FAFSA, SNG Fall & Winter, CC that offers loans & removal of rejected email addresses (n = 19,718) • results can be generalized to larger CC population • 5% return expected – 10% achieved
Survey Instrument • Survey designed specifically for this study • Web-based survey to reduce cost • Separate survey for D vs. I students • Differentiate levels among groups • Ensure dependency status known • Validity of survey items supported through generating items from literature review • “Skip-logic” used to present appropriate questions & reduce respondent fatigue
Data Collection & Procedure • Letter of cooperation from the Higher Education Coordinating Board re. access to data • “Access code” given to students to provide “consent” • personally identifiable information was removed • Data was screened for missing or extreme values and underrepresented cells • representation in all but 1 of 16 combinations (part-time Dependent borrowers)
Statistical Approach • Log-linear analysis used to examine the cross-tabulations • categorical variables • all variables can be analyzed at once reducing Type 1 error • The log-linear approach extends the basic chi-square approach to the analysis of multidimensional contingency tables
Statistical Approach • A 2x2x2x2 contingency table for Phase 1 from the cross-tabulations of the IV (dependency status) and DVs (working, borrowing & attendance) • Phase 1 Explanatory Model: DS = WK + BW + PT • Phase 2 Explanatory Models: DS = WKL and DS = BWL Variable Coding
Phase 1 Findings • Expected frequencies found to be acceptable • Explanatory Null Model Null = STATUS + PT * WK * BW • Null Model found statistically significant (L2 = 107.924, df = 7, p < .001) • Zero Order Model (3 dependent variables) not significant
Phase 1 Findings • Strongest difference in the borrowing component • Null hypothesis rejected as significant differences found
Phase 1 Findings • Post hoc analysis of Standardized Residuals considered all 3 DVs • Bonferroni technique used for Type I error a priori alpha (.05)/16 (# of cells) gives threshold of p = .003 for significance • Only 3 of 16 combinations were significant • Dependent working (SR = 5.980, p < .001) • Dependent borrowing (SR = -5.171, p < .001) • Dependent working, borrowing (SR = -2.899, p = .002)
Phase 2 Findings • None of the differences was found to be significant for either working or borrowing levels ~ null hypotheses supported • working level (L2= .303, df = 2, p = .859) • Borrowing level (L2 = 6.753, df = 2, p = .034) • post hoc analysis did not produce any significant findings • Larger sample size may have led to significant results
Phase 3 Findings • Primary reasons to work • earn funds to pay expenses • desire to gain skills & experience • Dependent comments: buy health benefits, pay bills, secure funds between quarters, & support family • Independent comments: health benefits, pay bills, family, have a good job & keep a routine
Phase 3 Findings • Primary reasons to borrow for Dependent • cover expenses • borrow the maximum • get immediate funding • Primary reasons to borrow for Independent • borrow the maximum • just what was needed • get immediate funding
Phase 3 Findings • Primary Dependent student reasons to attend part-time • work • avoid scheduling conflicts • Primary Independent student reasons to attend part-time borrow the maximum • work • meet family obligations
Interpretation of Findings • The importance of borrowing may represent an emerging pattern during a recession of low-income community college students receiving significant grant aid who still need to borrow • Although Independent students are using each option, the differences between themselves and Dependent students were not significant • Perhaps this finding reflects that during a recession the differences between the two groups are less apparent • It appears students pursue a variety of financing methods to balance their limited fiscal and time resources
Interpretation of Findings • The reasons students reported they chose to select each of the finance options reflects a tension of balancing time and finances to support their success in school • It appears that during a recession students may be more likely to desire the maximum funding available, even in the form of a loan to cover expenses • The reasons align with idea that financial resources are the major factor that determines attendance status (King, 2002) • Students appear to consider the impact of their financing choices on their academic success • The self-reported reasons students select finance options reflect the importance of factors such as academic preparation, family situation, work obligations, and affordability
Some Descriptive Patterns • Patterns do not mirror literature review • Independent students worked at lower rate (50% vs. 69%) & borrowed at higher rate (45% vs. 18%) • Perhaps students are unable to find work in the recession & need to borrow to fill gaps • Half or more of students in both groups worked more than 30 hours • About ¾ of Dep students & 84% of Ind borrowed at least “medium” levels • Most in part-time students in both groups attended ¾ time
Implications for Social Change • Financial aid is at the heart of social change, providing access & opportunities to low-income students • The amount & type of the financial aid may make a difference • for low-income students receiving grant aid during a recession, there was still a need to attend part-time, borrow & work • Examination of students’ financing strategies better positions policymakers & campus administrators to make program, policy & procedural adjustments
Recommendations for Action • Adjust policies to address unique challenges of Independent students • i.e. early incentive grant to transfer students • Examine part-time levels on campuses • Information campaigns re. scholarships, budgeting, minimizing debt & repercussions of too many work hours • Target work-study policies to improve retention of needy students • Evaluate costs of both groups students to determine proper budgets
Suggestions for Further Study • Replicate study & improve sample size • Compare to non-recessionary periods • Survey students from all sectors of institutions • Explore reasons more deeply through focus groups • Examine behavior of students without full grant packages • Control for confounding variables
Conclusion • There were differences in the financing strategies • Part-time enrollment and working were statistically significant & borrowing was especially statistically significant • Dependent students were over-represented in working & under-represented in borrowing • Reasons the financing strategies chosen related to the need for funds & time to support their expenses & academic success
Hypotheses • H1˳: There will be no differences between dependent or independent low-income community college based on their chosen financing options (work, borrow, and/or part-time). • H1A: There will be significant differences between dependent or independent low-income community college students based on their financing options chosen (work, borrow, and/or part-time). • H2A˳: There will be no differences between working dependent or independent low-income community college students based on their level of work. • H2AA: There will be significant differences between working dependent or independent low-income community college students based on their level of work. • H2B˳: There will be no differences between dependent or independent low-income community college student borrowers based on their level of loans. • H2BA: There will be significant differences between dependent or independent low-income community college student borrowers based on their level of loans.
Decision Making Theories • Two social cognitive theories evaluated behavioral, cognitive & environmental factors that influence decisions • Skinner (1971) suggested that behavior is controlled primarily by environment • Bandura (1986) focused on cognitive reflection and social environment