The Impact of Student Loans on Baccalaureate Degree Attainment: A Gender Perspective

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1 Running head: LOANS ON DEGREE ATTAINMENT: A GENDER PERSPECTIVE 1 The Impact of Student Loans on Baccalaureate Degree Attainment: A Gender Perspective Xiaodan Hu PhD Fellow Higher Education Administration College of Education University of Florida 229A Norman Hall, Gainesville, FL [email protected] Dennis A. Kramer II, Ph.D. Assistant Professor Higher Education Administration College of Education University of Florida Submitted to 40th annual conference of the Association for Education Finance and Policy February 14, 2015 ABSTRACT: As a primary type of financial aid to support student access and success in higher education, the total amount of federal student loan has been increasing during the past decades. Whether federal loans are effective in student completion, which is specified as baccalaureate degree attainment at public four-year institutions, is a question worth exploring. This study conducted Propensity Score Matching and a set of logistic regressions in testing this relationship, as well as gender differences. The results indicated that taking federal student loan has no impact on the probability of baccalaureate degree attainment, and gender does not have a statistically significant impact. However, for each $1,000 increase in cumulative federal loan, students baccalaureate degree attainment probability increases 2.4 percent, and female and male students respond to federal loan types slightly differently. KEYWORDS: student loan, baccalaureate degree attainment, gender

2 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE 2 The Impact of Student Loans on Baccalaureate Degree Attainment: A Gender Perspective Introduction Since its launch decades ago, the federal student loan programs have been prevalent as a primary financial source to support students in accessing universities and colleges. However, getting the students into college does not fully serve the purpose of promoting student success in postsecondary education. Another significant component of student success is student completion, which is essential to the United States in a knowledge-driven global economy (Wagner, 2006). The cost of attending college has increased significantly during the past decades. In , the published price, including tuition and fees and room and board, of attending a public four-year institution was $12,123, but the number went up to $18,943 in (constant dollar). Federal loans take up about 37 percent of total undergraduate student aids (Baum, Elliott, & Ma, 2014). Whether federal loans are effective in student completion, which is specified as baccalaureate degree attainment at public four-year institutions, is a question worth exploring. This study will conduct a set of logistic regressions in testing this relationship. Moreover, gender differences will be taken into account to understand the pattern of baccalaureate degree attainment and federal loan taking. Literature Review Overview of Baccalaureate Degree Attainment As an irreplaceable element in student success, degree attainment is one of the essential indicators of educational quality at four-year institutions. Price (2004) pointed out that though college enrollments have been generally improving during the past decades, graduation rates are decreasing. He cited research results of the American College Testing Service, revealing that the five-year graduation rate at public four-year colleges declined from 48.5 percent in 1987 to

3 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE percent in 2000 (p. 37). Based on the National Education Longitudinal Study (NELS) of 1992, about 58 percent of high school graduates enrolled at a four-year institution, and 59 percent successfully earned bachelor s degrees by age 26. Therefore, only 34.3 percent of high school graduates did not only attend four-year institutions but also obtained baccalaureate degrees (Bowen, Chingos, & McPherson, 2009). Increasing equality in degree attainment has a positive effect on individuals as well as on communities. At the individual level, both tangible incomes and intangible benefits are considered to be associated with degree attainment. The credential effects of baccalaureate degrees is assured by previous research that the average returns to baccalaureate degrees are higher than Associate s degrees or high school diplomas (Avery & Turner, 2012; Grubb, 2002; Jaeger & Page, 1996). Earning a bachelor s degree also opens up the possibility of graduate-level studies and advanced degrees. From a broader perspective, degree attainment rate serves as an indicator of social equality. The least advantaged population is less likely to be academically prepared and financially ready, but is under higher risk of dropping out from colleges. Under the assumption of sheepskin effect, the non-completers will be employed with a lower rate of return and retain in the same socioeconomic status (SES) (Roksa, 2011). As upper-class individuals have a higher likelihood of college completion, the lack of equality in degree attainment would only reinforce the advantages and prevent social mobility (Price, 2004). The individual factors that influence baccalaureate degree attainment included gender, race, SES, parental education level, and students academic performance, especially their math preparation (Martin, 2005; St. John & Chung, 2006). Generally speaking, female, higher SES, higher parental education level, higher academic ability are associated with higher degree attainment rate. Based on the National Education Longitudinal Study of 1988 (NELS:88/2000),

4 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE percent female and 71.9 percent male students in the top quartile of high school academic intensity obtained a bachelor s degree or higher. However, only 12.7 female and 11.2 percent male students in the lowest quartile did so (Peter & Horn, 2005). Students in the highest quartile of family income hold higher odds of earning baccalaureate degrees than students in other income groups (Roksa, 2011). Cabrera, Burkum, and La Nasa s (2005) study concludes that students completion rate at four-year institutions increases as one moves up the SES ladder, and students in the highest SES quartile have a 44 percent chance of higher of degree attainment than students in the lowest SES quartile. Similarly, the higher the parental educational level, the higher possibility of students completing their baccalaureate study at a younger age (Bradburn, Berger, Li, Peter, & Rooney, 2003). Though the effect of race shows an inconsistent result, ethnic minorities were less likely to be retained in college, and the retention gap between nonminority and minority students increases during the subsequent college years (Wohlgemuth et al., 2007; Zumeta, 2004). Institutional characteristics and students college involvement also have significant influences on degree attainment, such as campus residence, institutional setting (public or private), institutional selectivity, peer SES, institutional size, and so forth (Oseguera, 2005). While the campus environment is critical to student success, students who are engaged in academic programs and college experience are more likely to graduate (Crosson, 1988; Zumeta, 2012). Furthermore, students attending full time and students starting college at a four-year institution are positively associated with a higher persistence rate (St. John, Kirshstein, & Noell, 1991). Christie (1998) found that students starting at two-year colleges have a 9 percent lower probability of baccalaureate degree attainment, compared with their counterparts at four-year institutions.

5 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE 5 Student Loans Impact on Baccalaureate Degree Attainment According to Hearn and Holdsworth (2005), the form of federal student aid has shifted from grants to loans during the past decades. Major types of federal loans are the Federal Perkins Loans, Stafford Loans, and the Parent Loan for Undergraduate Students (PLUS) program. In 2010, 18,945,000 recipients received $105,201 million in all loan programs, including $1,106 million Perkins Loans (1%), $36,741 million subsidized Stafford (35%), $44,689 million unsubsidized Stafford (42.5%), $14,165 million PLUS (13.5%), and $8,500 million other loans (8%) (Zumeta, Breneman, Callan, & Finney, 2012). For the Class of 2013, 18 percent colleges average debt rose at least 10 percent (The Institute for College Access & Success, 2014). Federal student loan debt outstanding reached approximately $665 billion and private student loan debt reached approximately $168 billion in June 2010, for a total student loan debt outstanding of $833 billion. Today, the total amount of student loan debt has reached over $1.2 trillion, as Avery and Turner (2012) predicted. Among the many factors that influence baccalaureate degree attainment, financial aid in various forms are provided in order to close the educational attainment gap between lower- and higher-income students. Financial needy students and minority students are more responsive to cost of college completion than cost of college access (Hu & St. John, 2001; Martin, 2005). Financial pressure does not only negatively impact students academic performance in class, but also has an adverse influence on their overall college experience and degree aspiration (Nora, Barlow, & Crisp, 2005). Student loans are expected to effectively address students financial needs by reducing the net price and assisting them in college enrollment, persistence, and degree attainment.

6 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE 6 Although it is controversial if financial aid has a direct impact on graduation rate, it is positively associated with students persistence and completion (DesJardins, Ahlburg, & McCall, 2002; St. John, Kirshstein, & Noell, 1991). For example, higher loan amount is related to a higher completion rate for Hispanic students, because students hope to be employed with a degree and to start loan repayment soon (Arbona & Nora, 2005). Student loans are specifically associated with higher graduation rate in the fifth and sixth academic year toward graduation (Wohlgemuth et al., 2007). Murdock (1987) confirmed financial aids positive impacts on students persistence, and further illustrated that the effect is stronger to four-year institutions than two-year institutions, private institutions than public institutions, and the latter years of college than the freshman year. However, it is worth noting that though financial aid can be influential to college enrollment and completion, it is not only the amount of aid that matters (Bowen et al., 2009, p. 162; Zumeta et al., 2012). Some studies argue that student loan limits are not keeping pace with increasing college cost over time, and some others question the overreliance on student loans. Kim s (2007) study showed that for low-income African American students, a high amount of student loan in the first year actually relates to low completion rate. She also perceives the overreliance on student loans has widen the income and racial gap with respect to degree attainment. In , 34 percent of undergraduate students took federal student loans with an average amount of $6,760. For low-income students, they must take out an average of $8,000 loans to attend a four-year institution (St. John, 2007). About 60 percent of students who obtained baccalaureate degrees in graduated with debt (Baum & Payea, 2013). Furthermore, student loans are often criticized for causing additional financial burden for students and their families. These students often have to pay a 33 percent premium on the

7 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE 7 portion of college paid for by student loans (Price, 2004, p. 47). Again, loan repayment became a serious financial burden especially for low SES students. Among the graduates who borrowed federal loans, 93 percent of borrowers still owed on loans one year after graduation with an average amount of $15,100 (Choy & Li, 2005). Gender Differences in Baccalaureate Degree Attainment and Student Loans Taking Between 1980 and 2001, the number of baccalaureate degrees awarded to females experienced a 59 percent increase, while the number of degrees awarded to males only increased 17 percent (Peter & Horn, 2005). In 2013, 52.4 percent of all baccalaureate degrees are earned by women students (U.S. Census Bureau, 2013). Based on national educational attainment rates, while 36 percent white, 22 percent African American, and 13 percent Hispanic females attained a bachelor s degree by 26 years old, only 30 percent white, 11 percent African American, and 11 percent Hispanic males reached the same standard (Bowen, Chingos, & McPherson, 2009). The assumption that male students were less likely to obtain baccalaureate degrees than female students across racial groups was confirmed by many other studies (Astin & Oseguera, 2005; St. John & Chung, 2006; Price, 2004; Wohlgemuth et al., 2007). However, Nora, Barlow, and Crisp (2005) raised an interesting question that were females more successful than males, does this mean that females bring characteristics with them that render them more likely to succeed, or is this pattern an indicator that the institution serves females more effectively than males? (p. 145). Wohlgemuth et al. (2007) indicated that higher graduation rates within a short period of time could also be due to female students enrolling in majors that could be completed in fewer terms or switching majors less frequently. Among baccalaureate degree recipients, 58.6 percent females and 56.1 percent males borrowed federal loans, and the average amount for females was $16,600 and

8 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE 8 $15,600 for males. Nora, Barlow, and Crisp (2006) studied the cohort and found major gender differences in students loan taking behaviors. First, the average loan amount was higher for female students across all six years, compared with male students. Also, starting from the fourth year, the headcount percentage of female students taking loans started to exceed the percentage of males. One possible explanation is that female students are more willing to take on more debt to complete their college degrees, whereas male students may be more reluctant to assume larger debts that must be repaid following graduation (p. 1645). Additionally, females and males also showed differences in terms of loan burden. More females took a larger proportion of monthly salary for loan repayment: 18.8 percent females use more than 13 percent of their monthly salary as student loan repayment but only 13.2 percent males do so. On the contrary, more males (30.2%) than females (25.6%) spent less than 8 percent salary on loan repayment (Choy & Li, 2005). Theoretical Framework One theoretical framework employed is the Ability-to-Pay Model on college persistence (Cabrera, Stampen, & Hansen, 1990). Based on Tinto s (1975) student integration model, the Ability-to-Pay theory indicates that financial aids remove financial barriers for low SES students and prevent them from dropping out from college. A variety of financial aids, such as grants, loans, and work-study, all contribute to lower the cost of attendance and to increase persistence and further promote completion. Cabrera, Stampen, and Hansen (1990) listed variables that affect student persistence, including ability to pay, academic integration, institutional prestige, significant others influence, skills and ability, social integration, institutional commitment, and goal commitment. To specify, students ability to pay does not only directly influence

9 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE 9 persistence but also has an effect on other non-economic variables mentioned above as well as their educational aspirations, which could all impact students degree attainment. Figure 1. Effects of Ability to Pay on College Persistence A second theory that guides this research is Block s (1985) Gender-differentiated Socialization Theory. This theory illustrates that children grow up in an environment that is influenced by their parents and others. Their influence constructs boys and girls different gender roles and personalities, including aggression, activity level, impulsivity, susceptibility to anxiety, achievement, potency of the self-concept, and social orientations. Additionally, parents self-reporting and observation, as well as teacher behaviors, were studied, indicating that many parents and teachers showed different levels of attention to and used different approaches toward boys and girls. With these impacts, girls and boys are raised to develop socially prescribed interests, attitudes and values consistent with their gender (Palapattu, Kingery, & Ginsburg, 2006). For instance, males are perceived to be more active in the physical and logical area while females are more engaged in the interpersonal and social world. In general, socialization

10 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE 10 practices create a more structured environment for females, but a less predictive environment for males. The socially constructed gender roles may contribute to female and male students possible differences in college experience, educational outcomes, and loan-taking behaviors. Hypothesis and Research Questions Specifically, this study utilizes the above scholar literature to generate hypothesis driving this inquiry. The null hypothesis is as follow. H0: There is no effect of federal loans on students baccalaureate degree attainment, and there is no difference in the effect between gender groups. Scholars have demonstrated the significance of degree attainment in higher education and mentioned that gender could be one of the influential factors. Meanwhile, federal loans, as a form of prevalent financial aid, were considered to be both positive and negative to students completion. Different student loan taking behaviors were observed in previous research. Given these studies, we postulate that there is an effect of federal loans on students baccalaureate degree attainment, and this effect is different between gender groups. This study is guided by the following two research questions: RQ1: What is the impact of student borrowing practices regarding federal student loans on baccalaureate degree attainment? RQ2: Does the impact of federal loans taking on baccalaureate degree attainment differ by gender? Data and Methodology This study employs the Education Longitudinal Study of 2002 (ELS: 2002) to obtain student characteristics, institutional variables, and financial aid information. Conducted by the U.S. Department of Education, the ELS surveyed the 2002 cohort of high school sophomores in April 2004, and followed up in 2006 and 2012 respectively. This dataset provides student s

11 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE 11 information relevant to their different patterns of college access and persistence that occur in the years following high school completion (U.S. Department of Education, n.d.). The ELS is also ideal for conducting Propensity Score Matching (PSM) because it is a rich dataset, which provides vast information on individual students. In the ELS dataset, 16,197 subjects information was included in total. After filtering out the individuals who had never attended a public four-year institution and the ones with missing information on federal loans and degree attainment, the sample size was reduced to 4,227. Without the option of a randomized controlled trial, college students must be stratified into subgroups in a manner that will control for the systematic differences between genders. This requirement is met by matching students in the treatment group of federal student loans with students in the control group of no federal student loans. Matching is an attempt to model the selection process by including information that contributes to a student s loan decision. By eliminating bias, the true treatment effect can be captured to reveal whether a federal loan borrower would have obtained a baccalaureate degree had they chosen not to take federal loan. The statistic of primary interest is the average treatment effect on the treated (ATT). Following conventional notation, let y1i be the outcome (in this case, the log of probability of baccalaureate degree attainment) of individual i if the individual is subjected to treatment (taking federal student loans). Let y0i be the probability of baccalaureate degree attainment without treatment (taking no federal student loans) for individual i. Further, let wi be a treatment indicator, taking a value of one if individual i has received treatment and zero otherwise. The ATT is defined as follows: ATT E(y1 y0 w = 1)

12 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE 12 The propensity score is simply the probability of treatment based given a number of covariates. In this case, PSM sums the probability of borrowing federal student loan into one number, and the propensity score model consists of observable variables that might contribute to federal loan borrowing. Logistic regression was utilized to estimate the propensity score. Nearest neighbor (NN) matching without replacement technique was used to match the treated units and the control units based on the estimated propensity scores. In this technique, individuals from the treatment group is chosen as a match for a controlled individual that is closest according to the propensity score, because there are more treated subjects in the sample. In NN matching without replacement, an untreated individual can only be matched once with a treated individual, and the order in which observations get matched was random (Caliendo & Kopeinig, 2005). For the matching process, the model includes covariates of pre-college characteristics: student gender, race/ethnicity, high school GPA, degree aspiration, parental education level, family SES, and the sector of first institution attended. Ideally, covariates of student characteristics during college years, such as college GPA, institutional location, and financial aid status, should also be included to make the best match possible. This will be discussed more in the limitation section. After matching, the confounding variables are controlled and the sample size was reduced to 844. Finally, the impact of federal loan with the unmatched sample and the matched sample was estimated respectively by a set of logistic regression, as follows: logit(y) = α + β1x1 + β2x2 + + βixi where Y is baccalaureate degree attainment, α is the Y intercept, βs are regression coefficients, and Xs are a set of predictors. These independent variables include three major categories:

13 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE 13 student characteristics, institutional characteristics, and student financial aid status. Appendix A presents a description and coding of all variables used in the analysis. Moreover, since the effects of federal student loan differ across genders is a second research question, a separate set of logistic regressions was conducted for each gender group. Only subjects in the treatment group were included in this test. Coefficients and odds ratios were calculated to test if one gender group is more sensitive to specific types of loans effect on baccalaureate degree attainment. Results and Findings Descriptive Statistics For a summary of characteristics of the population of interest, Table 1 shows the distribution of gender and degree attainment within the treatment group and within the control group after matching. Amongst the 844 matched subjects, 441 (52.3%) attended a four-year public institution but did not gain a baccalaureate degree while 403 (47.7%) did graduate with a degree. 360 (42.7%) subjects are male and 484 (57.3%) are female. Table 2 provides a summary of differences between treatment and control groups after matching. Most notably, the two groups differ substantially in the number of Hispanic and African American students. The number of African American students that borrowed federal loans was higher than the ones who did not borrow. Fewer Hispanic students borrowed federal loans than the ones who did not borrow. Students in the treatment group have a slightly lower high school GPA. Compared to the treatment group, more students who did not take federal loans enrolled in a public four-year institution first, enrolled part-time in their sophomore year, transferred fewer times, and were more likely to attend highly selective four-year institutions. For the treatment group, the average

14 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE 14 amount of total federal loan was $23,132.82; cumulative subsidized Stafford and Perkins was $10,667.06, and total Stafford (both subsidized and unsubsidized) was $21,366.82, Table 1. Gender and Degree Attainment Distribution for Students with Federal Loans (Treatment) and Students without Federal Loans (Control) Condition Treatment Control Baccalaureate Degree Attainment Gender Yes No Male Female (47.2%) (52.8%) (41%) (59%) (42.7%) (57.3%) (44.3%) (55.7%) Table 2. Unadjusted means, and Standard Errors for Other Variables Treatment Mean (SE) Control Mean (SE) Variable Race/Ethnicity White.51 (.024).49 (.024) Hispanic/Latino.09 (.014).16 (.018) Black/African American.17 (.018).11 (.015) Asian/Pacific Islander.18 (.019).18 (.019) Multiracial or Other.05 (.011).06 (.011) Parental Education Level Less than High School.05 (.011).10 (.015) Graduated High School / GED.15 (.017).16 (.018) Attended 2-Year - No Degree.13 (.016).13 (.016) Associates Degree.15 (.017).08 (.013) Attended 4-Year - No Degree.13 (.016).11 (.015) Baccalaureate Degree.23 (.020).26 (.021) Master's Degree or Equivalent.09 (.014).10 (.014) Doctorate or Advanced Degree.07 (.012).07 (.012) SES Lowest Quartile.19 (.019).27 (.022) Second Quartile.23 (.021).25 (.021) Third Quartile.32 (.023).24 (.021) Highest Quartile.26 (.021).23 (.021) High School GPA (Categorical by.5) 4.16 (.060) 4.38 (.066) Education Aspiration High school diploma or lower.01 (.005).03 (.008) Attend College.13 (.017).11 (.015) Graduate from College.45 (.024).42 (.024) Master s Degree or Equivalent.18 (.019).24 (.021) Doctorate or Advanced Degree.16 (.018).15 (.017) Don t know.06 (.012).05 (.011) Months between HS exit & PS entry 3.96 (.192) 3.94 (.196) Sector of First HEI Attended Public 4-year or Above.55 (.024).61 (.024) Private, not-for-profit, 4-year or Above.13 (.017).07 (.012)

15 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE 15 Private, for-profit, 4-year or Above.02 (.008).00 (.002) Public 2-year.27 (.022).30 (.022) Full-time Enrollment in 2006 (Y/N).52 (.025).40 (.025) Cumulative Pell (409.04) (337.61) Number of years receive Pell 2.20 (.111) 2.44 (.092) Cumulative PLUS (626.77) 0 (.000) Cumulative Stafford ( ) 0 (.000) Cumulative Subsidized Stafford and Perkins (444.17) 0 (.000) Cumulative Federal Loan ( ) 0 (.000) Number of HEIs Attended 2.14 (.036) 1.97 (.037) Highest selectivity of all HEIs attended Highly Selective 4-year.27 (.022).18 (.019) Moderately Selective 4-year.44 (.024).48 (.025) Inclusive 4-year.20 (.019).18 (.019) Non-Selective 4-year.09 (.014).17 (.018) Number of Observations Regression Analysis First, a logistic regression on the unmatched sample was conducted with all variables (Model 1). This result was used to compare with the regression on the matched sample (Model 2). Table 3 reports the comparison between the models, as well as the treatment effects for baccalaureate degree attainment, which were estimated from the logistic regression. In Model 2, the ATT measures the average difference in probability of degree attainment between students who took federal loans and the probability that these students would have had they taken no federal student loans. A test of the full model indicated that the predictors as a set reliably distinguished between students baccalaureate degree attainment and no attainment (χ 2 (38) = , p <.001). The logistic regression model was statistically significant. Prediction success overall was 73.4 percent (61.6% for no attainment and 82.2% for degree attainment). Nagelkerke s R 2 of.362 indicated a moderate relationship between prediction and grouping. Table 3. Results from Logistic Regression Models Predicting Baccalaureate Degree Attainment Model 1 (Unmatched) Model 2 (Matched) Variables Coefficient (SE) Odds Ratio Coefficient (SE) Odds Ratio Loan Taker (Y/N) (.162)* (.384) 1.120

16 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE 16 Cumulative Federal Loan ($1,000).030 (.004)*** (.011)* Gender (Female=1, Male=0) (.281) (.300).975 Gender*Loan Taker.153 (.294) (.416).668 Race/Ethnicity White Ref group Ref group Hispanic/Latino.052 (.148) (.312).692 Black/African American (.141) (.361).528 Asian/Pacific Islander (.144) (.292) Multiracial or Other (.209) (.477).493 Parental Education Level Less than High School (.295) (.653).592 Graduated High School / GED (.181) (.439).478 Attended 2-Year - No Degree (.175) (.410)**.298 Associates Degree (.167) (.430)*.419 Attended 4-Year - No Degree (.155) (.373).584 Baccalaureate Degree Ref group Ref group Master's Degree or Equivalent.210 (.146) (.366).914 Doctorate or Advanced Degree (.189) (.485).831 SES Lowest Quartile Ref group Ref group Second Quartile (.166) (.369) Third Quartile.041 (.184) (.416) Highest Quartile.053 (.215) (.500) High School GPA (0.50).336 (.042)*** (.095)*** Education Aspiration High school diploma or lower Ref group Ref group Attend College (.642) (1.209) Graduate from College (.620) (1.185) Master s Degree or Equivalent (.622) (1.189) Doctorate or Advanced Degree (.626) (1.200) Don t know (.652) (1.243).937 Months between HS exit & PS entry (.018)*** (.038).935 Sector of First HEI Attended Public 4-year or Above Ref group Ref group Private, not-for-profit, 4- year or Above.014 (.132) (.361) Private, for-profit, 4-year or (.577).410 Above ( ).000

17 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE 17 Public 2-year.702 (.117)*** (.265)** Full-time Enrollment in 2006 (Y/N).893 (.175)*** (.377)* Cumulative Pell ($1,000).050 (.016)** (.036)** Years receive Pell (.057)*** (.131)**.649 Number of HEIs Attended (.065)*** (.151)***.443 Highest selectivity of HEIs Highly Selective 4-year Ref group Ref group Moderately Selective 4-year (.104)*** (.263)**.502 Inclusive 4-year (.149)*** (.354)*.429 Non-Selective 4-year (.230)*** (.483)***.122 Number of Observations 4, Nagelkerke R Square (*p <.05. **p <.01. ***p <.001) For the primary research interest, Model 2 indicated that taking federal loans does not have a statistically significantly effect on students baccalaureate degree attainment. The result section will focus on Model 2 because its sample is less biased. Controlling for differences in the probability of federal loan taking, taking federal loan is not associated with the likelihood of baccalaureate degree attainment. However, for each $1,000 increase in cumulative federal loan, students were times as likely to graduate with a baccalaureate degree. Both models showed that gender does not have a statistically significant impact on students baccalaureate degree attainment, nor does it has a significant interaction effect with loan-taking. Significant results were also found for predictor variables with respect to student background in Model 2. Compared with students whose parents obtained a baccalaureate degree, students with parents attended two-year colleges as their highest educational leve are less likely to obtain a baccalaureate degree. Parents attempting associate degrees are related to a 70 percent lower probability for the students, while parents obtaining associate degrees are associated with a 60 percent lower probability for the students. One unit (.5 grade point) of high school GPA increase is associated with 39.7 percent higher possibility of degree attainment. No effect was

18 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE 18 found for students educational aspiration in 2004, when most of the subjects entered college. No significant difference was found among different racial groups or family SES either. Furthermore, students higher education involvement and institutional characteristics were statistically significant to their baccalaureate degree attainment probability. One of the most striking findings is that enrolling full-time in 2006, when most of the cohort students were in their sophomore year, was related to a much higher possibility at 260 percent of degree attainment than enrolling part-time. Another interesting finding is the significance of the sector of first postsecondary institutions students attended. While literatures delineated that attending community colleges first may lower baccalaureate degree attainment, our finding indicates that compared to attending four-year public institutions, enrolling at a two-year public college as the first postsecondary institution is significantly positively associated with baccalaureate degree attainment at 2.2 times. Also, for every one more postsecondary institution a student attends, the likelihood of degree attainment dropped by 55.7 percent. The higher selectivity of any institution the students ever attended, the higher possibility of their baccalaureate degree attainment. Compared to students who attended a highly-selective four-year institution, those attended an inclusive four-year institution only have a 42.9 percent probability of graduating with a baccalaureate degree. Additionally, students Pell status played a significant role in predicting their degree attainment. Every $1,000 more of the cumulative Pell amount students received represents 12.8 percent higher likelihood of baccalaureate degree attainment. However, for each one year increase in the amount of time students receiving Pell scholarship, the likelihood reduced by 35 percent. The variable that was not significant was time length of delayed enrollment, meaning that the months between high school exit and college entrance does not have a significant difference.

19 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE 19 Table 4. Results from Logistic Regression Models Predicting Baccalaureate Degree Attainment by Gender Groups Female Male Variable Coefficient Odds Ratio Odds Ratio Coefficient (SE) (SE) Cumulative Federal Loan ($1,000).047 (.043) (.025) Cumulative PLUS ($1,000).029 (.013)* (.016)* Cumulative Stafford ($1,000) (.046) (.031).990 Cumulative Subsidized Stafford and Perkins ($1,000).001 (.025) (.026)*** Nagelkerke R Square Number of Observations (*p <.05. **p <.01. ***p <.001) Finally, because gender groups did not indicate any significant effect in the ominous test, a separate set of logistic regressions were conducted to test gender differences in their sensitivity to the effect of different types of federal loans on baccalaureate degree attainment. The sample used in this test only included loan takers in the treatment group. Table 4 presents the gender differences in responding to different types of loans. Among students who borrowed federal loans, the cumulative amount of federal loans was not significant to either gender groups. Specifically, both genders respond positively to PLUS loans. For female students, every $1,000 more PLUS increases their degree attainment probability by 2.9 percent, and 3.3 percent for male students. For subsidized Stafford and Perkins loans, while every $1,000 increases male students degree attainment possibility by 9.3 percent, it does not have a significant effect on female students. Although the amount of cumulative Stafford was not significantly associated with baccalaureate degree attainment, the results indicated that it was negatively related to degree attainment for both genders. In conclusion, by conducting PSM and logistic regression, the null hypothesis was retained: There is no statistically significant effect of federal loan taking on students baccalaureate degree attainment, and no gender difference was found in the effect.

20 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE 20 However, the amount of federal loan does have a significant effect, and female and male students respond to different types of federal loans slightly differently. Discussion and Limitation Partly consistent with previous studies, about half of the subjects in the matched group obtained a baccalaureate degree. Undergraduate students parental educational level, high school GPA, enrollment status, institutional sector, Pell status, number of institutions attended, and the highest selectivity of institutions ever attended are considered to be significant factors that influence students baccalaureate degree attainment. No statistically significant effect was found for predictors, including race, gender, family SES, students educational aspiration, and delayed enrollment. Model 1 (Unmatched sample) indicated inconsistencies with Model 2 (Matched sample) due to sample biases. For instance, Model 1 pointed out that delayed enrollment was a significant predictor, but Model 2 did not indicate such significance. The findings are congruent with an important point made by Bowen et al. (2009) that there are more factors influencing student completion and degree attainment besides the availability and amount of financial aids. Similarly, the ability to pay does not only directly impact student persistence, but also interacts with other factors according to Cabrera et al. (1990). Student loans can be a positive investment for long-term benefits on income, job security, employment, and so forth, but the financial burden brought by it should also be addressed. As one of the potential factors, gender does not have a significant impact that both genders can be equally successful in baccalaureate degree attainment with the current financial aids system and other supports. One major limitation of the study resides in the methodology. First of all, PSM assumes that all factors are taken into account to calculate the propensity score. This means that all the

21 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE 21 unobservable factors were missing from the calculation. In this study, due to limited access to the database, several important factors were not included, such as college GPA, institutional location, and cost of attendance. Borrowing $8,000 and attending an institution in California is different from attending an institution in Texas if taking into account of living expenses. The amount of other financial aids students received including scholarships, grants, and work-study can also strongly influence the grouping results. Without including these unobservable variables, sample bias still exist between the two matched groups. Additionally, the study revealed some gender similarities and differences in federal loan s impact on the degree attainment. One of the initial thoughts at the planning stage of this study was aligned with the Gender-differentiated Socialization Theory. As the theoretical framework indicates, due to different gender roles and personalities, female students may behave differently from males with respect to the process and result of degree attainment. For example, if a female student becomes a parent during college years, is the degree attainment likelihood the same for her, compared with a male student who becomes a parent, controlling for all other factors? Because of the limited scope of this study, many factors related to gender differences were not considered. For the available findings, parents taking out loans for students higher education may serve as a positive factor for students to complete a degree, but the amount of Stafford (unsubsidized and subsidized) has an insignificant negative effect. Different genders respond to loan types slightly differently: Male students tend to react more positively toward subsidized federal loan than female students. In the follow-up studies, institutional weights and students weights will be taken into account so that the conclusion is generalizable to a larger population. Implications

22 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE 22 One major finding of this study is that taking federal loans is not associated with baccalaureate degree attainment. However, the reasons behind this phenomenon were not explored in this study. As Dynarski and Scott-Clayton (2013) mentioned, due to the proliferation of financial aids, complexity of student backgrounds, and diversity of institutional characteristics, the effect of student loan on baccalaureate degree attainment at four-year institutions is under unexpected interactions between all these factors. It is necessary to examine this topic with a more detailed approach. One direction is to differentiate the willingness to pay, the ability to pay, and the willingness to borrow. The current study employed the theoretical framework which focuses on the ability to pay, assuming that federal loans could help students to overcome financial barriers. But in reality, students with lower ability to pay may not be willing to take out loans and student with higher ability to pay may, on the contrary, be willing to take out loans. These interaction effects could change a students anxiety level, motivation, and educational commitment. More work needs to be done in order to sort out the impact of federal loan: Does the fact of taking federal loans changes students likelihood of obtaining a baccalaureate degree; or it only leaves the student with more debt without supporting them in obtaining higher educational credentials? Another direction of future research is to focus on which type of financial aid is more effective to a certain group of students, and how it will affect the financial aid policy. If PLUS is more influential to students, their parents can be informed that their financial contribution benefits students baccalaureate degree attainment. For male students, if unsubsidized Stafford has a stronger impact on their degree attainment, this forms can be encouraged. Furthermore, quadric effects should be tested to reveal the optimized effect of federal loans on baccalaureate degree attainment. Even though the increasing amount of federal loans can be associated with

23 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE 23 higher probability of degree attainment, there is also a point that this positive effect starts to become less influential or even become negative. More in-depth research can be conducted to test different population s sensitivity to different types of financials aid. This will not only help students and their family to make informed loan decisions, but also to provide evidence for future policy making and policy adaptations.

24 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE 24 References: Arbona, C., & Nora, A. (2005, May). Predicting college attainment of Hispanic students: Individual, institutional, and environmental factors. Paper presented at the 2004 annual meeting of the Association for Institutional Research, San Diego, CA. Astin, A. W., & Oseguera, L. (2005). Pre-college and institutional influences on degree attainment. In A. Seidman, College student retention: Formula for student success, pp Westport, CT: Praeger Publishers. Avery, C., & Turner, S. (2012). Student loans: Do college students borrow too much--or not enough? Journal of Economic Perspectives, 26(1), doi: /jep Baum, S., Elliott, D. C., & Ma, J. (2014). Trends in student aid The College Board. Retrieved from trends-student-aid-report-final.pdf Baum, S., & Payea, K. (2013). Trends in student aid The College Board. Retrieved from Block, J. H. (1983). Differential premises arising from differential socialization of the sexes: Some conjectures. Child Development, 54, Bowen, W. G., Chingos, M. M., & McPherson, M. S. (2009). Crossing the finish line: Completing college at America s public universities. Princeton, NJ: Princeton University Press. Bradburn, E. M., Berger, R., Li, X., Peter, K., & Rooney, K. (2003). A descriptive summary of bachelor s degree recipients 1 year later, with an analysis of time to degree (NCES ). U.S. Department of Education, National Center for Education Statistics. Washington, DC: U.S. Government Printing Office.

25 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE 25 Cabrera, A. F., Burkum, K. R., & La Nasa, S. M. (2005). Pathways to a four-year degree: Determinants of transfer and degree completion. In A. Seidman, College student retention: Formula for student success, pp Westport, CT: Praeger Publishers. Cabrera, A. F., Stampen, J. O., & Hansen, W. L. (1990). Exploring the effects of ability to pay on persistence in college. Review of Higher Education, 13, Caliendo, M., & Kopeinig, S. (2005). Some practical guidance for the implementation of Propensity Score Matching. IZA Discussion Paper (No. 1558). Berlin, Germany. Choy, S. P., & Li, X. (2005). Debt burden: A comparison of and Bachelor s degree recipients a year after graduating (NCES ). U.S. Department of Education, National Center for Education Statistics. Washington, DC: U.S. Government Printing Office. Christie, R. L. (1998). The net effects of institutional type on baccalaureate degree attainment: A study of the sophomore cohort of the 1980 NCES High School and Beyond Data [doctoral dissertation]. UMI Number: Retrieved from ProQuest. Crosson, P. H. (1988). Four-year college and university environments for minority degree achievement. The Review of Higher Education, 11(4), DesJardins, S. L., Ahlburg, D. A., & McCall, B. P. (2002). A temporal investigation of factors related to timely degree completion. The Journal of Higher Education, 73(5), Dynarski, S., & Scott-Clayton, J. (2013). Financial aid policy: Lessons from research. The Future of Children, 23(1), Grubb, W. N. (2002). Learning and earning in the middle, part I: National studies of prebaccalaureate education. Economics of Education Review, 21,

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27 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE 27 Oseguera, L. (2005). Four and six-year baccalaureate degree completion by institutional characteristics and racial/ethnic groups. Journal of College Student Retention, 7(1-2), Palapattu, A. G., Kingery, J. N., & Ginsburg, G. S. (2006). Gender role orientation and anxiety symptoms among African American adolescents. Journal of Abnormal Child Psychology, 34(3), doi: /s Peter, K., & Horn, L. (2005). Gender differences in participation and completion of undergraduate education and how they have changed over time (NCES ). U.S. Department of Education, National Center for Education Statistics. Washington, DC: U.S. Government Printing Office. Price, D. V. (2004). Borrowing inequality: Race, class, and student loans. Boulder, CO: Lynne Rienner Publishers. Roksa, J. (2011). Differentiation and work: Inequality in degree attainment in U.S. higher education. Higher Education, 61, doi: /s St. John, E. P. (2007). Integrating public finance into strategies for improving preparation, college enrollment, and persistence. In N. Hoffman, J. Vargas, A. Venezia, & M. S. Miller (Eds.), Minding the gap: Why integrating high school with college makes sense and how to do it, pp Cambridge, MA: Harvard Education Press. St. John, E. P., & Chung, A. S. (2006). Attainment. In E. P. St. John (Ed.). Education and the public interest: School reform, public finance, and access to higher education, pp Dordrecht: Springer. St. John, E. P., Kirshstein, R. J., & Noell, J. (1991). The effects of student financial aid on persistence: A sequential analysis. The Review of Higher Education, 14(3),

28 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE 28 Tinto, V. (1975). Dropout from higher education: A theoretical synthesis of recent research. Review of Educational Research, 45, U.S. Census Bureau. (2013). Educational Attainment in the United States: Retrieved from: U.S. Department of Education. (n.d.). Education Longitudinal Study of 2002 (ELS:2002). Retrieved from Wagner, A. P. (2006). Measuring up internationally: Developing skills and knowledge for the global knowledge economy. San Jose, CA: National Center for Public Policy and Higher Education. Wohlgemuth, D., Whalen, D., Sullivan, J., Nading, C., Shelley, M., & Wang, Y. (2007). Financial, academic, and environmental influences on the retention and graduation of students. Journal of College Student Retention, 8(4), Zumeta, W. (2005). State higher education financing: Demand Imperatives meet structural, cyclical, and political constraints. In E. P. St. John & M. D. Parsons (Eds.), Public funding of higher education: Changing contexts and new rationales, pp Baltimore, MD: The Johns Hopkins University Press. Zumeta, W., Breneman, D. W., Callan, P. M., & Finney, J. E. (2012). Financing American higher education in the era of globalization. Cambridge, MA: Harvard Education Press.

29 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE 29 Appendix A. Description and Coding of Variables Variables Description and Coding Whether student has ever obtained a baccalaureate degree in 2012 Degree Attainment (0=No, 1=Yes) Whether student has ever taken federal student loan in 2012 Loan Taker (0=No, 1=Yes) Cumulative Federal Loan Cumulative federal loan amount for undergrad and grad/1000 Gender Sex in 2004 (0=male, 1=female) Student's race/ethnicity in 2012: - White - Hispanic/Latino Race/Ethnicity - Black/African American - Asian/Pacific Islander - Multiracial and Others Parents highest level of education in Did not finish high school - graduated from high school or GED - attended 2-year school with no degree Parental Education Level - graduated from 2-year school - attended college with no 4-year degree - graduated from college - completed Master s degree or equivalent - completed PhD, MD, other advanced degree Quartile coding of SES in lowest quartile SES - second quartile - third quartile - highest quartile GPA for all courses taken in the 9th - 12th grades categorical High School GPA (0= , 1= , 2= , 3= , 4= , 5= , 6= ) How far in school student thinks will get (in 2004) - High School graduation or less - Attend College Education Aspiration - Graduate from College - obtain Master s degree or equivalent - obtain PhD, MD, other advanced degree Sector of first-attended PS institution - public 4-year or above Sector of 1 st HEI - private not-for-profit 4-year or above - private for-profit 4-year or above - public 2-year Months between HS exit & PS Number of months between HS exit and PS entry entry Full-time Enrollment in 2006 January 2006 postsecondary enrollment status: (0=No, 1=Yes) Cumulative Pell Cumulative Pell - (as of 2012)/1000

30 LOANS ON BACCALAUREATE DEGREE ATTAINMENT: A GENDER PERSPECTIVE 30 Number of years receive Pell Pell: number of years received - (as of 2012) Cumulative PLUS Cumulative PLUS - (as of 2012)/1000 Cumulative Stafford Cumulative Stafford for undergrad and grad/1000 Cumulative Subsidized Stafford Cumulative subsidized Stafford and Perkins for undergrad and and Perkins grad/1000 Number of HEIs Attended Number of postsecondary institutions attended Highest selectivity among all attended postsecondary institutions - Highly selective 4-year institution Highest selectivity of all HEIs - moderately selective 4-year institution attended - inclusive 4-year institution - Selectivity not classified institutions