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As the cost of higher education continues to rise, postsecondary students and their families increasingly take out student loans in order to pay for their educations. The recent increase in student loan debt has been accompanied by an increase in the diversity of the postsecondary student population, with greater numbers of non-traditional students seeking the economic benefits that have historically been associated with the completion of higher education.

Yet the realization of such benefits is uncertain. Many students who attempt higher education, and who incur student loan debt, do not graduate. According to recent data, the average 6-year graduation rate is 58% – meaning that fewer than 6 in 10 students who begin college have earned degrees six years later [1]. Graduation rates vary by institution type, demographic characteristics, and other factors, such as whether students remain at the same institutions throughout their academic careers [2]. Moreover, greater diversity in the labor force and in the types of institutions that offer postsecondary credentials, combined with the adoption of labor-saving technologies by employers, have contributed to variation in the employment outcomes of college graduates. The result has been an increase in the complexity of the educational and financial decisions that prospective postsecondary students face.

Policy makers, philanthropists, and researchers have raised questions about how these trends may impact our economy and society. The UNC Center for Community Capital’s research program in higher education finance seeks to inform public policies and institutional best practices regarding educational debt, student financial literacy, and the future of postsecondary education.

What We Have Learned

Our first wave of studies collected in-depth information about the varied experiences of postsecondary students and graduates using a combination of survey data collection, focus groups, and qualitative interviews [3],[4],[5],[6],[7]. Study participants of varied socioeconomic and ethnic backgrounds were recruited in cities around the country, as well as from different types of postsecondary institutions.

In subsequent research, we have analyzed data from national public surveys of postsecondary students, as well as administrative data from the federal student loan portfolio [8],[9]. We have also carried out an institutional field scan and spoken with a variety of stakeholders, including school administrators [10]. These activities have provided information about how students pay for college, the evolution of student loan debt usage over time, trends in student loan default, and the efforts of postsecondary institutions to reduce student loan debt levels and encourage student loan repayment.

In partnership with the UNC School of Law, the center has also recently begun exploring the impact of debt and debt aversion on college completion rates for Latino students. This research will include an electronic survey of over 2,000 respondents and in-depth telephone interviews with a smaller subset of this sample.

An overarching theme to emerge from our work to date is that students would have liked a better understanding of the true costs and benefits of a college education before making postsecondary educational and financial choices.

Moreover, we found that conventional narratives surrounding higher education and student loan debt may inadequately reflect reality, not only with respect to the diversity of individual and group experiences, but also with respect to broader national trends. In particular:

  • First-generation, low-income, and minority college students frequently indicate a lack of knowledge about how to select and apply to colleges, make college financing decisions, manage stress, and generally navigate the academic, interpersonal, and financial aspects of the college experience. These students are also more likely to take on student loan debt in order to pay for their educations. Existing college preparation and support programs are viewed as effective but could be expanded to have a broader impact, especially with regard to financial literacy.
  • The expected family contribution assumed in determining eligibility for federal financial aid does not necessarily reflect the financial resources for higher education to which students have access. What a household can contribute towards the cost of college, according to tax documents, is not necessarily indicative of what a household will contribute towards the cost of college. Additionally, existing financial aid eligibility criteria do not account for bankruptcies, parental caregiving, incarceration, and other familial or interpersonal challenges that may cause students to shoulder the full financial responsibility of supporting themselves and others. Policies that take into consideration these realities would reduce the extent of financial hardship experienced by these students.
  • The predictors of student loan default are well documented in the research literature and have not changed greatly in the past 50 years. The most salient predictors are degree completion and the type of institution attended. Student loan defaults tend to be concentrated among non-traditional students, who often come from socioeconomically disadvantaged backgrounds, are less academically and socially prepared for postsecondary study, and are less likely to graduate. Much of the recently observed increase in student loan default rates is attributable to greater numbers of these students borrowing to attend less selective academic institutions and experiencing poor labor market outcomes.
  • The steps that postsecondary schools have taken to limit student loan debt and prevent student loan default most commonly take the form of informational materials, such as financial literacy training or financial counseling. Other approaches include subsidies, such as tuition waivers, completion grants, student emergency funds, or pilot income-sharing agreement programs. Some institutions focus on providing academic support, including free academic materials and counseling or tutoring. The most successful initiatives seem to be those that take a data-driven, institution-wide approach to tracking potential leavers and supporting them in completing their degrees: because this requires a campus-wide, cross-departmental commitment, this approach is unusual.
  • Federal student loans, which account for about 90% of loans made for postsecondary education, represent about 7% of national GDP. However, student loan debt estimates may understate the true burden of educational debt. The median postsecondary student in the US does not take out student loans, and more than 30% of students at four-year institutions do not do so. These statistics raise questions about how substantial numbers of students are paying for their educations: are they using scholarships and grants, savings, income, or other forms of debt that may substitute for student loans, including mortgages and credit cards?
  • Consistent with increasing variation in the composition of the postsecondary student population, students report considerable variation in post-graduation financial outcomes, along with variation in beliefs about whether college was worth the cost. However, even when higher education does not yield the financial returns that students expected, they value it greatly for the personal growth that it engenders.

Next Steps

Building on what we have learned, we envision future work in the following major areas:

  • Tracking and Reporting: Through data collection and the analysis of existing data, we will seek to generate a comprehensive picture of the extent of postsecondary educational debt and its costs and benefits (economic, social, and emotional), and of how these evolve over time. Educational debt may include not only student loans incurred by students and their families, but also mortgages, home equity lines of credit, credit cards, and any other debt vehicles that are used to pay education-related expenses. We will also seek to place educational debt within the context of consumer balance sheets more broadly, for an understanding of the extent to which educational debt may interact with or displace other debt and expenditures. We will make a summary of key indicators and trends available to the public, policy makers, philanthropists, and other stakeholders through a series of online dashboards and reports.
  • Documenting Diversity of Experience: Through data collection, focus groups, and qualitative interviews, we will explore the variety of ways in which different student and borrower groups experience postsecondary education, their reasons for pursuing postsecondary study, and their reasons for taking on or not taking on educational debt. We will investigate how the usage, costs, and benefits of educational debt and other types of debt vary across student groups, and how these groups may be better or worse off as a result of the financial decisions that they make related to higher education and educational debt. Moreover, we will explore the incidence and different forms of poverty and financial hardship that exist in academia, as well as the potential interplay among student loans, other forms of debt, and social safety net programs. We will document the diverse narratives encountered and make them available through a series of reports.
  • Measuring the Impacts of Educational Debt: Through data collection, the analysis of existing data, and partnerships with postsecondary institutions, we will seek to assess how the usage and timing of educational debt influence degree completion, educational debt repayment, labor market outcomes, psychological and physical health, household formation, retirement preparation, homeownership, and educational satisfaction. We will explore the magnitude of these impacts both for postsecondary students overall and for various student groups. We will also investigate the ways in which educational debt may displace or complement other forms of debt and expenditure, as well as the economic implications of these interactions for individuals and the economy. We will make the results of these assessments available in a series of reports and journal articles.
  • Evaluating and Designing Programs and Policies: Through data collection and partnerships with postsecondary institutions and policy makers, we will evaluate the effectiveness and efficiency of existing and new programs and policies intended to encouraging the informed usage of educational debt by postsecondary students and their families, to encourage the repayment of this debt, and to mitigate any negative impacts of this debt. We will also explore alternative models for financing higher education at the individual and aggregate levels. Moreover, we will consider the appropriate relative contributions of students and their families, the government, employers, postsecondary institutions, and other stakeholders to the growing cost of higher education in light of the changing nature of the labor market. With the knowledge gained through these evaluations, we will make recommendations with respect to new program and policy designs, which we will make available in a series of reports and journal articles.

Funding Partners

This research program has been made possible with generous funding from the Jessie Ball duPont Fund, MetLife Foundation, Lumina Foundation, and the Annie E. Casey Foundation. The opinions expressed in the program’s research deliverables do not necessarily reflect the views of the funders. In order to sustain and expand the research program, we are seeking to deepen our relationships with existing funders and to attract new funders. To learn about how you can support our work, please explore our website or email us at


[1] Shapiro, D., Dundar, A., Huie, F., Wakhungu, P.K., Bhimdiwala, A. & Wilson, S. E. (2018, December). Completing College: A National View of Student Completion Rates – Fall 2012 Cohort (Signature Report No. 16). Herndon, VA: National Student Clearinghouse Research Center.

[2] Ibid.

[3] The Reality Education and Assets Partnership: Making the Case for Student Financial Management Programs at Minority Serving Institutions. 2009. Research Report, UNC Center for Community Capital.

[4] It Made the Sacrifices Worth It: The Latino Experience in Higher Education. 2018. Research Report, UnidosUS and the UNC Center for Community Capital.

[5] “If You Want to Rise Above”: First-Generation College Students and Opportunities for Enhancing Supportive Services. 2019. Research Brief, UNC Center for Community Capital.

[6] Was It Worth It: The Complexities and Contradictions in Assessing the Value of Higher Education. 2019. Research Brief, UNC Center for Community Capital.

[7] “I Was On My Own”: Reconsidering the Regulatory Framework for Family Support during College. 2019. Research Brief, UNC Center for Community Capital.

[8] Student Loan Debt in North Carolina: An Overview of National Public Data Sources. 2020. Internal Research Report prepared for the Annie E. Casey Foundation, UNC Center for Community Capital.

[9] Predictive Analytics for Reducing Student Loan Default. 2020. Research Report, UNC Center for Community Capital.

[10] Reducing Student Loan Debt: Best Practices for Postsecondary Institutions in North Carolina. 2020. Research Report, UNC Center for Community Capital.