Higher education and student debt: how structural flaws affect rational investment

Abstract

Overwhelming debt for college students is an increasing phenomenon. When one plans to make a rational investment into their future through higher education, one simultaneously plans for the unavoidable debt load that accompanies the pursuit of academic knowledge. While tuition rates are on the rise, some scholars look to the financial aptitude of students as a key variable in understanding the accumulation of debt by college graduates. Various studies have been conducted to understand how fiscal knowledge affects the debt load of students. The studies, including those of Javine (2013) and Heckman and Grable (2011), have consistently determined that financial know-how does not affect loan usage or debt load. This study, conducted at the University of Wisconsin-Stout through a survey of 1,000 student participants, arrives at a similar conclusion. The variables drawn from the survey, including whether the respondent took a financial planning class, dependency status, past financial experiences, and GPA, had no correlation with the amount of student debt each participant had accumulated. However, analysis of historical and economic constructs has been included to give a better understanding of the financial dilemmas at hand. With the collective information and research, the issue of growing student debt can be looked at in a holistic and interdisciplinary way.