Loan prohibition policies have been shown to benefit low-income college students

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UNIVERSITY PARK, Pennsylvania – Public colleges and universities in the United States have long served as engines of social mobility for low-income students, but the rising cost of higher education in recent decades has diminished that role. Penn State and Michigan State University researchers argue that a no-loan policy, in which student loans are replaced with institutional grants that do not require repayment, could be a way of making higher education institutions more accessible to low-income students.

“We believe there is benefit to education at all levels, including higher education, to serve as those social leaders who help reduce inequality,” said Junghee Choi, a graduate student at Penn State College of Education Department of Education Policy Studies (EPS.). ). “But in the course of time the inequality has not diminished, rather the existing inequality either reproduced or only increased.”

Choi, along with Qiong Zhu, postdoctoral fellow at Michigan State’s Education Policy Innovation Collaborative, who recently received his doctorate in higher education from Penn State, and Yi Meng, doctoral student at EPS, present their results in their paper, “The Impact of No-Loan Policies on Student Economic Diversity at Public Colleges and Universities,” recently published in Research in Higher Education.

“Research has shown that attending select colleges after graduation brings economic returns,” said Zhu. “It is important to increase the social mobility of low-income students.”

The study, which examines the impact of no-loan policies on the economic diversity of students in public four-year colleges, is an extension of a 2019 study conducted by Kelly Rosinger, Assistant Professor of Education at EPS, and colleagues, the the effects of no-loan policies in private elite universities. The study by Rosinger and colleagues found that “Universities that had a universal no-loan policy, where admission was not restricted by income or other criteria, saw a significant increase in enrollments for students from the middle-income quintile, but less for those from the lower range two quintiles. ”

“I think the importance of our study is that it provides information to (university) administrations,” said Meng. “By examining the barriers in detail, I believe the study also provides information and resources to help them better reflect on best practices in terms of designing (grant) packages and helping low-income students.”

In their paper, the researchers find that the cost of attendance is a major barrier for low-income students to access higher education. For more loan offers check this website https://www.paydaychampion.com/

“Affordability in public four-year institutions has decreased significantly over the past three decades due to the decline in support per student by states and the increase in tuition fees,” they wrote.

A distinguishing feature of their study, the researchers said, was that they were able to examine the impact of no credit policies on enrollment in public institutions by using more detailed information on family income than most similar previous studies. Previous studies have relied on documentation from Federal Pell Grants awarded to undergraduate students who are in financial need. However, as evidenced by previous studies, the researchers claim that Pell scholarship receipts as proxy for low-income status are limited, in part because both low and middle-income students could be included in the Pell Scholarship count .

Instead of using the Pell grant as a measure of low-income status, the team obtained data from the Mobility Report Card (MRC), which is based on more than 30 million tax records. The MRC data provides information about the proportion of students enrolled from each income quintile for almost all higher education institutions in the United States from approximately 2000 to 2011.

Through their research, Zhu, Choi, and Meng found that introducing no-loan policies in public institutions increased the enrollment rate of low-income students (bottom two quintiles with family incomes), which is what students with annual parental income of about $ 40,000 or more less corresponds.

“However, our study shows that breaking down financial barriers is not equally effective in improving access across the entire distribution of low-income students,” the researchers write in their paper. “We found that the impact of the no-loan policy was concentrated on students from the second income quintile and was generally weak for students from the lowest part of the income distribution.”

According to Zhu, the different effects of no-loan policies may be related to the heterogeneity of the groups involved, and the strategies should be tailored to their particular circumstances. Students in the bottom quintile face additional barriers such as transportation and daily expenses in addition to tuition fees. She added that due to a lack of information, they may also have difficulty applying for grants.

“I think there are many more structural barriers for low-income students to enroll in very selective colleges,” she said.

Zhu said these barriers can be removed by adding additional supportive measures for low-income students to the guidelines

“Money is important, but money alone may not be enough,” said Zhu. “Coaching and advice on funding applications and enrollment processes are very important for low-income students in order to find their way through the application process at the university. Personalized messages about financial support could increase enrollment. ”

In addition to financial and informational barriers, Choi said, studies show that social and cultural issues hinder low-income students in the college admission process.

“Low-income students may feel like they don’t belong to selected institutions because they don’t know anyone like themselves in those schools.”

One of the limitations of the study, Choi said, is that the researchers couldn’t explain the specific differences in institutions’ non-credit policies that led to different results. Although all institutions implemented a credit-free policy with common basic characteristics, results varied even in schools assigned the same selectivity level. One possible explanation, he added, is that the income categories are too broad and more precise classifications might be useful for future research.

“It’s really important to have a more nuanced understanding, especially for the most economically disadvantaged students,” said Choi.

Zhu, Choi, and Meng said future studies could also examine the different effects of different policies without credit. One area that could be explored, Zhu said, is how a no-loan policy affects academic achievement or even financial and professional achievement after graduation.

Choi added that it was important to consider the long-term sustainability of no-loan policies, which come at a high price for an institution and could be put on the table due to budget cuts related to the COVID-19 pandemic.

“This line of research can reveal barriers that low-income students must overcome if they want to go to college,” Meng said.

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