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Student Loans

Student Loans. Paying the price of education: Perceptions of loans and the burden of debt Nikki Johnston & Louise Ryk. Astrive Student Loans.

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Student Loans

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  1. Student Loans Paying the price of education: Perceptions of loans and the burden of debt Nikki Johnston & Louise Ryk

  2. Astrive Student Loans "After students have exhausted scholarships, federal loans, and federal grants, an ever widening financial gaps exists-a gap between what students have and what they really need to go to college. That’s where private student loans from Astrive Student Loans come in.” • http://www.youtube.com/watch?v=_oavcYPd9vw

  3. Opening Questions: • Who here has a student loan or a student line of credit? • Imagine your are entering college or university for the first time next year. What would be the costs and benefits that you would take into consideration when deciding whether or not to take out a student loan?

  4. Thaler and Sunstein • Education is becoming more expensive • The methods of financing of this higher cost of education vary and present a challenge for students and parents; for example, lengthy application • Thaler and Sunstein propose two nudges: • FAFSA application to be combined with the tax-return application – software package • To avoid loans altogether, start college savings accounts (“529 plans” in the US; RESPs in Canada)

  5. The Study • “Understanding High School Student’s Willingness to Borrow to Pay for College Prices” by Laura W. Perna • Examines perceptions of student loans; determinants of financing post-secondary education • Methodology • Findings are assessed through: • student and family • school and community • higher education • the broader social, economic and policy contexts

  6. Key findings of study • The state plays a limited role in shaping student perceptions of loans • Students in low-resource schools are debt averse • Some students in middle-resource schools are willing to borrow • Most students in high-resource schools are willing to borrow • Parental perceptions influence students in all cases • Students are generally uninformed

  7. Key Findings continued • Primacy of Cost/Benefit Analysis • Role of Habitus

  8. Policy Implications • More information is needed for low and middle-resource students • Trained counselors and teachers • Collaboration between high schools and colleges and universities • Students should not simply be advised to take out loans

  9. Closing Remarks • Critique of Perna: policy implications are purely information based • Primacy of Cost/Benefit Analysis in decision making • Debt averse vs. risk takers • Affects of loans on academic performance • What are some of the ways that we can reduce debt? • Increasing accessibility – tuition issues, part-time - i.e. Quebec • Incentives for debt reduction – provincial retention strategies

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