The burden of student loan debt: differences in socioeconomic background and attitudes towards higher education

Abstract

Increased reliance on student loans to finance higher education (HE) raises concerns about unequal access and repayment burdens. However, who borrows and what motivates students and parents to borrow remain unclear. A longitudinal survey tracked parents and students from high school into their early career to explore the effects of socioeconomic background and attitudes towards HE on taking out student loans in Japan. The findings reveal that, first, families’ economic circumstances are negatively associated with taking out student loans. Second, students, especially those from lower socioeconomic backgrounds, may choose a two-year rather than four-year institution to reduce debt. Third, students and their mothers differ in their motivations for borrowing: students’ perceived risk of failing to graduate discourages them from borrowing money, whereas mothers attach more importance to the cost–benefit of student loans. These results have policy implications for alleviating debt burden and promoting equal access to HE.

Keywords:

• Student loan
• socioeconomic background
• attitudes towards higher education
• motivations for borrowing
• longitudinal survey

Acknowledgements

The author would like to thank the anonymous reviewers for their helpful comments and suggestions on the earlier versions of the manuscript.

Disclosure statement

There are no conflicts of interest.

Notes

1 Annual earnings were calculated by multiplying ‘Contractual cash earnings’ by 12 and adding ‘Annual special cash earnings’.

2 A new grant was introduced in 2020 as part of a financial aid reform (JASSO 2021), but this reform was not in place for the cohort of students in this study.

3 The survey conducted in 2012 and the second follow-up survey were approved by the Research Ethics Committee of the Graduate School of Human Sciences, Osaka University.

4 In this follow-up survey, although a new sample of the same cohort as the original survey was added to address the problem of small sample size, the current analysis used the respondents who were observed in both the original and the second follow-up survey. This is because the original survey provided rich subjective variables that may influence whether respondents took out student loans.

5 Indeed, regardless of its name, the ‘JASSO Scholarship Loan programme’ is not a grant but a loan.

Additional information

Funding

This work was supported by the Japan Society for the Promotion of Science (JSPS KAKENHI) [Grant Number JP19H00608, JP19H01637, JP21K02282].