crucial choices: how students’ financial decisions affect their academic success jacqueline e....
TRANSCRIPT
![Page 1: Crucial Choices: How Students’ Financial Decisions Affect Their Academic Success Jacqueline E. King October 31, 2005](https://reader035.vdocuments.net/reader035/viewer/2022062217/56649e4c5503460f94b41b94/html5/thumbnails/1.jpg)
![Page 2: Crucial Choices: How Students’ Financial Decisions Affect Their Academic Success Jacqueline E. King October 31, 2005](https://reader035.vdocuments.net/reader035/viewer/2022062217/56649e4c5503460f94b41b94/html5/thumbnails/2.jpg)
Crucial Choices:
How Students’ Financial Decisions Affect Their Academic Success
Jacqueline E. KingOctober 31, 2005
![Page 3: Crucial Choices: How Students’ Financial Decisions Affect Their Academic Success Jacqueline E. King October 31, 2005](https://reader035.vdocuments.net/reader035/viewer/2022062217/56649e4c5503460f94b41b94/html5/thumbnails/3.jpg)
Beginning Postsecondary Students National Longitudinal Study
Produced by the U.S. Department of Education
National Center for Education Statistics.
Nationally-representative sample of 9,000 1995-96
first-time students, followed up in 1998 and 2001.
Tracks persistence across institutions.
![Page 4: Crucial Choices: How Students’ Financial Decisions Affect Their Academic Success Jacqueline E. King October 31, 2005](https://reader035.vdocuments.net/reader035/viewer/2022062217/56649e4c5503460f94b41b94/html5/thumbnails/4.jpg)
Income Groups Studied
17% D ependent(average incom e $12,782)
11% Independent w / D ependents(average incom e $8,902)
5% Independent w /o D ependents(not included)
32% Low -incom e(150% of poverty or less )
37% D ependent(average incom e $81,971)
4% Independent(not included)
41% M iddle- and U pper-Incom e(300% of poverty or m ore )
27% O ther(not included)
All B eginning Postsecondary S tudents
![Page 5: Crucial Choices: How Students’ Financial Decisions Affect Their Academic Success Jacqueline E. King October 31, 2005](https://reader035.vdocuments.net/reader035/viewer/2022062217/56649e4c5503460f94b41b94/html5/thumbnails/5.jpg)
Background Characteristics
32% of beginning students 41% of beginning students
53% dependent 90% dependent
(34% independent w/ dependents)
60% female 50% female
48% non-white 20% non-white
44% age 20 or older 15% age 20 or older
35% married and/or w/ kids 7% married and/or w/kids
Low-income Middle- and Upper-income(up to 150% of poverty) (300% of poverty or more)
![Page 6: Crucial Choices: How Students’ Financial Decisions Affect Their Academic Success Jacqueline E. King October 31, 2005](https://reader035.vdocuments.net/reader035/viewer/2022062217/56649e4c5503460f94b41b94/html5/thumbnails/6.jpg)
Academic Background
64% first-generation 33% first-generation
13% alternative diploma 3% alternative diploma
5% no high school diploma 2% no high school diploma
56 % delayed college entry 23% delayed college entry
Low-income Middle-and Upper-income(up to 150% of poverty) (300% of poverty or more)
![Page 7: Crucial Choices: How Students’ Financial Decisions Affect Their Academic Success Jacqueline E. King October 31, 2005](https://reader035.vdocuments.net/reader035/viewer/2022062217/56649e4c5503460f94b41b94/html5/thumbnails/7.jpg)
Academic Preparation
51%
27%
22%
31%33%
36%
0%
10%
20%
30%
40%
50%
60%
Not rigorous Slightly rigorous Moderately orhighly rigorous
Low-income
Middle- and Upper-income
![Page 8: Crucial Choices: How Students’ Financial Decisions Affect Their Academic Success Jacqueline E. King October 31, 2005](https://reader035.vdocuments.net/reader035/viewer/2022062217/56649e4c5503460f94b41b94/html5/thumbnails/8.jpg)
Institution Choices
50%
19%
10%
21%
42%
34%
20%
4%
0%
10%
20%
30%
40%
50%
60%
Public Two-year orLess
Public Four-year
PrivateFour-year
For-profitTwo-yearor Less
Low-income
Middle- and upper-income
![Page 9: Crucial Choices: How Students’ Financial Decisions Affect Their Academic Success Jacqueline E. King October 31, 2005](https://reader035.vdocuments.net/reader035/viewer/2022062217/56649e4c5503460f94b41b94/html5/thumbnails/9.jpg)
Financing Choices
83%
63%
58%
46%
33%
62%
71%
36%
39%
27%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Applying for Aid
Working WhileEnrolled
Attending Part Time
Living at Home
Borrowing StudentLoans
Low-income Middle- and upper-income
![Page 10: Crucial Choices: How Students’ Financial Decisions Affect Their Academic Success Jacqueline E. King October 31, 2005](https://reader035.vdocuments.net/reader035/viewer/2022062217/56649e4c5503460f94b41b94/html5/thumbnails/10.jpg)
Attendance Choices
Less than Full-time/Full-year Attendance77%
38% 35%
76%
63%
22%15%
71%
0%10%20%30%40%50%60%70%80%
Public Two-year or Less
Public Four-year
PrivateFour-year
For-profitTwo-year or
Less
Low-income
Middle- and Upper-income
![Page 11: Crucial Choices: How Students’ Financial Decisions Affect Their Academic Success Jacqueline E. King October 31, 2005](https://reader035.vdocuments.net/reader035/viewer/2022062217/56649e4c5503460f94b41b94/html5/thumbnails/11.jpg)
Average Unmet Need
$2,704$3,151
$5,275 $5,193
$245$773
$1,026
$2,881
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
Public Two-year or Less
Public Four-year
PrivateFour-year
For-profitTwo-year or
Less
Low-income
Middle- andUpper-income
![Page 12: Crucial Choices: How Students’ Financial Decisions Affect Their Academic Success Jacqueline E. King October 31, 2005](https://reader035.vdocuments.net/reader035/viewer/2022062217/56649e4c5503460f94b41b94/html5/thumbnails/12.jpg)
Employment Choices
36%
13%
29%
23%
29%
19%
33%
19%
0%
5%
10%
15%
20%
25%
30%
35%
40%
No Work 1 to 14Hrs/wk
15 to 34Hrs/wk
35+ Hrs/wk
Low-income
Middle- andUpper-Income
![Page 13: Crucial Choices: How Students’ Financial Decisions Affect Their Academic Success Jacqueline E. King October 31, 2005](https://reader035.vdocuments.net/reader035/viewer/2022062217/56649e4c5503460f94b41b94/html5/thumbnails/13.jpg)
75%
78%
77%
82%
88%
84%
86%
87%74%
85%
73%
90%
0% 20% 40% 60% 80% 100%
Start at Public 4-yr
Start at Private 4-yr
Attend Full-time/Full-year
Live On Campus
Work 1 to 14 Hrs/wk
Borrow, Work 1 to 14 Hrs/wk
Low-income Middle- and Upper-income
Choices and PersistenceLow-income (63%)
Middle- and Upper-income (75%)
![Page 14: Crucial Choices: How Students’ Financial Decisions Affect Their Academic Success Jacqueline E. King October 31, 2005](https://reader035.vdocuments.net/reader035/viewer/2022062217/56649e4c5503460f94b41b94/html5/thumbnails/14.jpg)
Work and Borrowing Choices
Low-income Students
6%
18%
13%
37%
6%
21%Did not borrow or work
Did not borrow, worked 1 to 14 hours
Did not borrow, worked 15+ hours
Borrowed, did not work
Borrowed, worked 15+ hours
Borrowed, worked 1 to 14 hours
![Page 15: Crucial Choices: How Students’ Financial Decisions Affect Their Academic Success Jacqueline E. King October 31, 2005](https://reader035.vdocuments.net/reader035/viewer/2022062217/56649e4c5503460f94b41b94/html5/thumbnails/15.jpg)
Work and Borrowing Choices
Middle- and Upper-income Students
8%
11%
10%
42%
8%
21%Did not borrow or work
Did not borrow, worked 1 to 14 hours
Did not borrow, worked 15+ hours
Borrowed, did not work
Borrowed, worked 15+ hours
Borrowed, worked 1 to 14 hours
![Page 16: Crucial Choices: How Students’ Financial Decisions Affect Their Academic Success Jacqueline E. King October 31, 2005](https://reader035.vdocuments.net/reader035/viewer/2022062217/56649e4c5503460f94b41b94/html5/thumbnails/16.jpg)
Working: Penny Wise and Pound Foolish?
Dick works 25 hours per week, takes 5 years to graduate.
Year 5 Income (25 hrs/week @ $7.50 + summer work) = $10,800
Cost of an extra year in college (educational expenses only) = $5,000
Net gain = $5,800
![Page 17: Crucial Choices: How Students’ Financial Decisions Affect Their Academic Success Jacqueline E. King October 31, 2005](https://reader035.vdocuments.net/reader035/viewer/2022062217/56649e4c5503460f94b41b94/html5/thumbnails/17.jpg)
Working: Penny Wise and Pound Foolish?
Jane borrows and works 15 hours per week, takes 4 years to graduate.
Year 5 Income as a graduate = $30,000
Total cost of loan
(borrowed $10k to work 15 hours per week at 7.25% interest with 10 year repayment) = $14,100
Net gain = $15,900
![Page 18: Crucial Choices: How Students’ Financial Decisions Affect Their Academic Success Jacqueline E. King October 31, 2005](https://reader035.vdocuments.net/reader035/viewer/2022062217/56649e4c5503460f94b41b94/html5/thumbnails/18.jpg)
Worksheet for Dick
Hourly Wage $_____/hour
Earnings* 1,440 hrs x $____
Annual tuition + books & supplies
Net Gain (earnings less tuition, books and supplies)
* Reflects 25 hours/week for 32 weeks and 40 hours/week for 16 weeks.
![Page 19: Crucial Choices: How Students’ Financial Decisions Affect Their Academic Success Jacqueline E. King October 31, 2005](https://reader035.vdocuments.net/reader035/viewer/2022062217/56649e4c5503460f94b41b94/html5/thumbnails/19.jpg)
Worksheet for Jane
Hourly wage $_____/hour
Loan amount* 320 hrs x $____/hr x 4 yrs =
Loan cost** $1,408 per $1,000
Starting Salary
Net Gain (salary less total loan cost)
* Reflects 10 hours/week for 32 week over 4 years.
** Based on a 7.25% interest rate and standard 10-year repayment plan.
![Page 20: Crucial Choices: How Students’ Financial Decisions Affect Their Academic Success Jacqueline E. King October 31, 2005](https://reader035.vdocuments.net/reader035/viewer/2022062217/56649e4c5503460f94b41b94/html5/thumbnails/20.jpg)
ConclusionsFull-time attendance and part-time work are the
surest path to a degree.
Borrowing can be a productive way to finance full-
time attendance and part-time work.
Low-income students who borrow and work part time
persist at high rates.
Even middle-income students choose to work and
avoid student loans.
![Page 21: Crucial Choices: How Students’ Financial Decisions Affect Their Academic Success Jacqueline E. King October 31, 2005](https://reader035.vdocuments.net/reader035/viewer/2022062217/56649e4c5503460f94b41b94/html5/thumbnails/21.jpg)
Recommendations
Integrate academic and financial advising.
Help students see the long-term academic and
financial implications of their choices.
Increase grant funding for low-income students--
especially who borrow and work.
Teach students about personal finance.
There is no one-size-fits-all solution.
![Page 22: Crucial Choices: How Students’ Financial Decisions Affect Their Academic Success Jacqueline E. King October 31, 2005](https://reader035.vdocuments.net/reader035/viewer/2022062217/56649e4c5503460f94b41b94/html5/thumbnails/22.jpg)