Tuition Not The Only Factor In Student Debt –

The cost of a college education has been a cause for concern among students and their families nationwide, and with student debt continuing to increase, many are identifying factors other than tuition for the cause of increases.

In a recent paper released by Cornell Higher Education Research Institute, author James Monks suggests that focusing on college tuition as the sole reason for rising student debt is a definite misfire. He argues that financial aid and admissions policies of higher education institutions also influence the amount of debt and examines the role these factors play.

Analyzing data from The College Board’s 2011 Annual Survey of Colleges and the 2011 Integrated Postsecondary Education Data System database of not-for-profit four-year colleges, the author finds that whether institutions that institute need-blind (not considering applicants’ financial situation) admissions policies and/or meet the full needs of all its students can increase average student debt by as much as 30%. Institutions that report to have need-blind admission policies have average student debt approximately 33% higher than comparable institutions that do not implement need-blind policies.

However, the impact of these policies varies across sectors. Being need-blind significantly affects student borrowing at public colleges, while meeting full-need has a statistically significant impact on student debt at private colleges.

Additionally, the report finds that public institutions which adhere to a need-blind admissions policy, likely enrolling more low-income students, have higher student debt after graduation. This is because “the mix of students” at a particular college becomes “less affluent.” If penalized for having higher levels of student debt, the schools may adopt admissions and financial aid policies which are less likely to enroll low-income students. This could mean both the public and private sector becoming more selective in admissions—by possibly heightening the focus on SAT scores—to better manage the profiles of enrollees and their subsequent borrowing levels.

Citing that institutions with higher average SAT scores have lower levels of student borrowing, the report suggests this may be because of the correlation between students and SAT scores and family income and because institutions with higher SAT scores tend to have greater resources which may be used to lower student borrowing.

Follow Valerie Jones on Twitter @ValerieJonesCMN