Student Loans and their Effects on College Consumption

Student Loans and their Effects on College Consumption

helb-loan disbursement - Peter Comes
Joe Franzwa
Everett Sommer
University of Illinois at Urbana-Champaign


Dr. Mary Arends-Kuenning
ACE 398

Student Loans and their Effects on College Consumption

Abstract

Student loans are becoming more of a problem for college students across many campuses’ nation wide because of increasing tuition costs and decreasing amounts of grants and scholarships.   Data was collected from a campus online survey and focus groups were conducted with University of Illinois Students, both methods focued on student loans and how they affects a college student’s consumption.  The results of the research have shown that college students at this university are not worried about their student loans and it does not affect their current consumption greatly, but does affect larger purchase decisions slightly.  This finding has shown that college students should possibly be more aware of their student loans while attending college.




Introduction
    As tuition has significantly increased over the past 20-30 years, it has become very common for college students to finance their education through loans.  Tuition has become so expensive that it has become near impossible for a student to pay for their education by working.  As a result, many students graduate college with thousands of dollars of debt waiting to be paid off.  Debt from student loans has become a common reality and something students nowadays just accept.  People believe that a college education is worth the price tag because it leads to a good job and higher earnings. 
    The purpose of this research project is to find out more about the connection between student loans and consumption.  The research sets out to answer if students spend more or less if they have a loan and their reasoning behind some of their decisions.  It is hypothesized that most college students just accept the fact that they are in debt. They do not worry about their loans because they expect to make a decent salary after they graduate and believe they will be able to pay the loans back later in life.  In addition, it is expected that students with loans are more likely to be in credit card debt and hold jobs.  Regardless of what the data indicates, something needs to be done about the rising cost of tuition.  Students also need to be made more aware of the dangers of debt before entering college so they can make better financial decisions.

Literary Review

    There is a vast assortment of literature on student loans and debt that particularly emphasize the situations of young people.  Anya Kamenetz is the author of “Generation Debt,” a literature work on the debt problems 18-34 year olds face.  She goes into detail on how student loans have been and will continue to negatively affect student’s financial and educational decisions because the cost of attending college has been increasing.  In addition, the author Jeffrey Williams wrote “Student Debt and the Spirit of Indenture,” and compares student loans to indentured servants of England in the 1600’s because of increasing pressure to pay off loans.  Both authors use very similar statistics and analysis to describe the environment of higher education and its effects that they are having on the current and climbing population of young people.  The findings were very similar, and each author takes strong stances on policies that affect college students, and will be discussed below.
Each author has found that the real cost of college has been increasing over the last two to three decades.  The price of college has risen faster than inflation for the last three decades and faster than family income for the last fifteen years.  The cost of college for the average American family is increasing at unprecedented rates because of state budget cuts and lack of funding for grants.  Two out of three students enrolled in college in this nation have to finance their way through college using student loans.  In 2004, the average college senior graduate had an astounding $19,200 in debt.  There are many different estimations of average debt, some ranging higher or lower than others, but $19,200 seems to be a moderately conservative estimation of debt for an average graduate.  In addition, the average indebtedness on credit cards for college students is $2,169 with over 90% of graduating seniors having a credit card.  With student loans being harder to obtain, it is agreed that many students have had to place their loans on their credit cards to be able to finance their education.
    These statistics show how much debt average college students are holding, and appears to be problematic.  Increases in tuition are affecting the rate at which college students are borrowing, as well as an increase in need for high school students to get a college education.  Many estimates have put the lifetime earnings differentials of a college graduate and a high school graduate at over $1,000,000 in life time earnings.   46% of 24 year olds in the top quintile of earnings had bachelor’s degree, versus 8% of college graduates in bottom quintile, showing the need to get a bachelor’s to assure a higher income stream.  With this being said, the cost of not getting a college education can be very expensive over a lifetime, causing increases in amounts of high school students to attend college.  In 1970 there were seven million college students, and just thirty two years later in 1992, there were fourteen million, despite of an increase of three million total populations from 36-39 million.  Getting a degree is no longer getting an education, but becoming an investment towards future earnings potentials.
    Another problem that college students are facing is the shrinking amounts of grants being given to students.  In 1971 45% of aid from the government came in the form of student loans, and 52% came in the form of a grant.  There has been a reversal in this trend, however, and in the late 1990’s just 41% of aid came in grants and 58% through student loans.  During the budget cuts from the federal government in the 1990’s, the federal government found it to be less costly to give out more federal loans versus grants.  During college, the federal government pays for your interest, and the interest does not start until six months after graduation and decided to use this method as its primary source of funding.  In 1972, the prestigious Pell Grant covered 72% of costs for a college student, and in 2004 just 36% of costs were covered. 
    With less amounts of grants being given out, students must pick up the bill by taking out loans.   Often private loans are the solution because it is becoming harder to get a student loan through the federal government.  The private loan industry has becoming an extremely profitable industry.  In 1995 the private loan industry grew from $1.1 billion to $15 billion in 2005 and many companies recorded record profits during this time period.  Private loans are often used and are much riskier and costlier than federal loans to students.  Private loans offer much higher interest rates (often nearing commercial loan rates), no deferments, no grace periods, and fewer repayment options. 
In the 2007-2008 school years an average University of Illinois graduating senior had $17,938 in debt.  Comparably, in 2003-2004 a graduating senior had only $13,994 in debt from the student financial aid office, so these figure do not even count private loans taken out.  In just a four year period, the average debt increased by nearly four and a half thousand dollars, and with a net increase of over 29% (located in Appendix G, is the full table).  This has been caused by increases in tuition over time at this university because of state cuts and increases in projects such as the ARC and many other campus wide projects.  In this four year period the amount borrowed went from around $83 million to nearly $122 million, which was an increase of 40.5% in this short time period.  The increase of students over this time period increased as well, and went from 5,785 graduating seniors students to 6,892.  The percentage of the students that borrowed stayed fairly steady that went from 48% to 51%, so the university is giving the same percentage of funding for student loans, but has to offer it to over a thousand more students paying higher tuition costs.  As we can see, there has been a sharp increase in the amount of students while keeping the same percentage borrowing that is making students in our university needing to borrow more money.  Information on private loans is rarely available because of the vast assortments of banks that offer private student loans, so these figures only include state and federal aid.

Methodology

In order to gather quantitative and qualitative data about the effect of having tuition loans s on college spending, we conducted three focus groups with university undergrad students as well as analyzed data from an online survey. The online survey was a multi-topic class collaboration of 103 questions; 33 were directed towards our topic. In order to send out this survey via a university email list, it had to be approved by Rhonda Kirts who is the Associate Dean of Students. She reviewed the questions to make sure they were appropriate and valid. The survey was sent by Campus Information Technologies and Educational Services at the University of Illinois (CITES) to a sample of 4,753 students who were selected to represents a 10% sample of the university. The sample was selected by the office of Carol Livingstone, Associate Provost and Director, Division of Management Information. The email that was sent is viewable in appendix A. 421 students responded to the survey, which is an 8.9% response rate and a .89% response from of the entire university. Appendix B lists the exact questions from the survey we chose to analyze. Students answered basic demographics such as year in school, race and gender so we could consider if there was any significant difference among demographics, the sample is analyzed in the sample section of the paper. We also asked about different types of income like summer or school jobs or parent’s support to see if this had an effect on loan size. The survey also asked students to estimate the amount of their loan upon graduation and how long they think it will take to pay it back. The survey allowed us to get numbers that may be more difficult in a focus group because asking about income and loan amounts is a subject that is very personal to some students. We analyzed the trends of the survey in the results section of this paper and discuss the implication of the data in the discussion section.
    In addition to collecting survey data, we chose to conduct three focus groups to get qualitative data and personal experiences from University of Illinois Undergrads. Focus groups were an excellent way of gathering information that surveys can not always get. Surveys limit the choices or manner of answering a question and may misrepresent the participant. Focus groups are also different than an interview because interviews do not capture the socialized disclosure that come from group behavior. In a focus group, the moderator asks the group a question and leaves the floor open for a group discussion. This allows participants to encourage one another and causes them to disclose more information (Krueger and Casey, 2000). We initially planned on doing four focus groups, three with students who have loans and one with students with no loans. By doing focus groups with those with and without loans separately, we would be able to capture the opinions of both groups with fewer conflicts of opinions. 
The recruitment process was difficult, and we were forced to take more than one approach. Our initial plan was to hand out a survey that would help us pick a diverse set of students. This survey is viewable under appendix C. We went to the Courtyard Café in the Illini Union to pass out recruitment surveys. We chose the Courtyard Café since there are always a mixed group of undergrads who are usually in-between class and therefore less likely to mind filling out a survey. To incentivize students to fill out a survey, we offered them candy bars. Before filling out the survey, they were also given the option to read our research project information form which is viewable in appendix D. We were able to gather 43 surveys from about an even number of males and females and a good mix of ages. The most important information on the survey was to find out if they had a loan, and if so, to what amount. We also asked if they would be willing to participate in a focus group and what their available times were. To our surprise, about half of the people surveyed said they were willing to meet. We decided to invite everyone that agreed to meet since we thought the response rate might be low. A copy of the email we sent is located in appendix E. Since this was our first attempt to gather a focus group, we decided to offer a very attractive incentive. Participants of our group would receive refreshments of pizza as well as a $10 gift certificate to Best Buy—at the time we didn’t realize gift cards were not allowed. We offered two different possible times and told them they must respond to take part in the discussion. Sadly, we only received a response from one person who was willing to meet. In hindsight, the requirement may have been at a busy time for students in the semester. We tried to conduct these focus groups the week before thanksgiving break which is a hectic time for students due to midterms and projects. Because of the overwhelming lack of willingness to participate, we were forced to take an alternative approach to recruitment. We decided each group member would be responsible for conducting one focus group and would recruit participants that were our own personal acquaintances. Everett moderated a group of two seniors and two juniors all of which were males. Peter moderated a group of six male seniors. Joe moderated a group of males, three sophomores and one senior. Each of the moderators provided pizza, soda and snacks for their participants. Discussions lasted for about a half hour each. Participants signed proper consent forms and the sessions were recorded and transcribed.

Sample
The online survey was sent out to 4,753 students in an attempt to gather data from a set of students that numerically represented the student body. The university is 64% Caucasian, 13% Asian/ Pacific Islander, 7% Hispanic, 7% African American, 6% Foreign, 2% Unknown race and less then 1% Native American. The sample sent was targeted towards 41% Caucasian, 9% Asian/ Pacific Islander, 5% Hispanic, 4% African American, 40% Foreign, 1% Unknown race and less then 1% Native American. We see a significant difference in the amount of foreign students targeted for this sample, 40% compared to 6%. Although this would not have been our preferred target sample, we were sharing this survey with another group that was studying only international students. Therefore, our survey was sent out to every single international student, 1899 in total. The response of 421 students were 55% Caucasian, 17% Asian/ Pacific Islander, 4% Hispanic, 1% African American, less then 1% Native American and 23% “other”. The response sample was fairly close for the majority groups: Caucasians, 55% compared to 64% and Asians, 17% compared to 13%. However, there was a large amount of students that classified themselves as “other”. It was found that 92% of those that claimed to be “other” were international students. We decided to omit all responses from international students and leave them out of our analysis. Although the study of international students and loans may be interesting, it was not congruent with our thesis. After this adjustment, the response, although small, is a fairy good representation of the student body.
    Another important demographic of the survey was year in school, gender, and major. The sample response was very even among all years: 28% freshmen, 23% sophomore, 24% junior, and 25% seniors represented the sample response. Gender was also fairly close but with a slight overrepresentation of females. The University is 47% female while the survey was 55% female. For Major’s, the largest representation was from LAS students at 39%, then Engineering at 24% then General studies, Business and Agricultural studies all made up 8% as well. University of Illinois is made up of 41% LAS, 17% Engineering, 10% business, 6% General studies and 8% ACES. We can clearly see there are no large biases in response rate and major or year in school.
    The university survey came out to be a good representation of our campus; unfortunately, it was more difficult to recruit a proper sample for our focus groups. Of the 14 people we conducted focus groups with, all were men. We had 0 freshmen, 3 sophomores, 2 juniors and 9 seniors. Each focus group was held with students who had loans. The original intent was to have a forth focus group with students without students loans to be used as a comparison. Although there was room for improvement, we still gained value from the discussions. Of course, it would have been better to have half the sample made of females, we had to do the best we could with the low willingness of participants.   

Results
Quantitative Results from the survey
Out of the 274 students surveyed, roughly 46% responded that they had a loan.  Table 1 shows a breakdown of the loan amounts.  Part of our research question was to see if tuition loans were an issue that students worry about.  In order to get some data on this topic, a question on the online survey asked “to what extent are you worried that you will not be able to pay off your student loans?”  Students were given the option of ‘very worried’, ‘somewhat worried’, or ‘not worried’.  Out of the 127 students who had a loan 14% were very worried, 48% were somewhat worried, and 37% were not worried.  Table 2 provides a cross table that compares the amount of the loan and the extent to which the student is worried about paying the loan back.  Although our data suggests that not that many students are worried about paying their loans back, the majority of students who answered that they were “very worried” about paying off their loan had a loan amount of $30,000+. 
    Our survey also gave us some results on if having a loan affects consumption.  The question “which of the following best describes how you think having student loans affects your consumption now?” was asked and students had the option of replying with ‘It increases consumption a lot’, ‘It increases consumption by a little’, ‘No effect’, ‘It Decreases consumption by a lot’, and ‘It decreases consumption by a little.’  The results of this question are illustrated in Table 3.  The majority of students who answered this question (57.65%) said that having tuition loans had no effect on their consumption.  22.45% students responded that it decreases their consumption by a little.  In order to find out if the loan amount played a role in how students consumption is affected, we made a cross table with both variables.  The results are provided in Table 4.  Generally it seems that loans do not significantly affect student’s consumption.  Based on the data, students who notice a decrease in consumption also happen to have a student loan.  As the loan amount gets larger the data suggests that students decrease their consumption
    Students’ employment was another factor that was included in the survey.  The employment results are included in Table 5.  52.55% of students surveyed did not hold a job.  Part time jobs were most common among students and 36.13% of students said they currently held a part time job.   Table 6 shows the relationship between having a job and having a loan.  There doesn’t seem to be any relationship between the two variables.  Less than 2% of students surveyed had a full time job.  The survey also considered students who worked in the summer of 2008.  81.75% of students surveyed worked in the summer of 2008.  There was not much of a correlation between having a loan and working in the summer of 2008.  47% of those who worked in the summer had a student loan, while 53% did not.  Of those that did not work in the summer, 44% had a loan while 56% did not.     
    Credit card information was another aspect of student spending that was included in the survey. Based on the survey results, students on average had one credit card.  The students were asked if they were in credit card debt and to what extent, based on a numerical range.  The results of this question are provided in Table 7.  88.83% of students answered that their credit card debt was less than $100, while 3.72% of students said they had credit card debt of over $1,000.  6 out of the 7 students who responded that they were in credit debt over $1,000 also had a student loan. In addition, students who were in credit card debt of $500 or greater were also more likely to have a student loan.  Table 8 shows a cross table of credit card debt and whether or not a student has a loan.
    Another component of our research dealt with future expectations and plans after graduation.  When asked questions about their expectation of earnings after graduation, the average amount students responded with was $50,249 with a minimum amount of $0 and maximum amount of $250,000.  On the topic of plans after graduation, 49.8% of students planed to work full time, 26.65% are planning on getting a masters degree, 14.13% plan on getting a Ph.D or M.D., 4.46% planed on going to law school, and 5.95% answered “other.” This information is provided in Table 9.
Qualitative Results from Focus Groups

    The participants in the focus groups were all students, varying age and demographics, but all three focus groups conducted had participants who had student loans.  In the three focus groups conducted, we asked them several questions about their student loans and how it affects their consumption as college students. 
    One of the first questions we asked our participants was if debt generally is a problem for college students.  Many people agreed that it was a problem, but it is very necessary to take to be able to afford a good education.  For many of our participants, debt was necessary because it was an investment in their education creating higher potential future earnings justifying taking on debt.  One participant said, “debt is just something Americans as a whole learn to live with, like going to college, buying a house—got to take out a loan.”  In general, our findings found that debt was a necessary part of life and there is no way getting around it, however, there are good and bad debt such as credit card bills versus student loans.  Student loans were considered as good debt and credit card debt seemed to be unnecessary at times because it is so easy to round up massive credit card bills that often take years to pay off because of the high interest rates. 
One of the questions we asked students, were the priorities of paying off their student loans.  Our respondents expressed a sense of urgency to pay off their debts.  One student said, “Mostly it will come down to is how fast you can start paying it back. So don’t spend a lot.  Cut back your lifestyle.”  The respondents were all anxious to pay off their loans so they would not accrue high amounts of interest.  Additionally, the participants agreed that their spending is of high concern, however, they were not that inclined to set budgets but rather constraints on the way they spend money.  Most of our participants had some sort of job, whether during the summer, winter break, or during the school year.  We saw that most of money generated from these time periods is used to finance personal spending, such as going out to eat or a movie, versus their fixed costs of rent and students loans.  One participant said, “My paycheck in the summer was 75% savings.”  Many large fixed expenses such as rent and utilities, tended to come from student loans or parents support.  Students that had summer jobs, tended to try to save as much as they could for the school year.  
Budgeting was another issue that we asked our participants and we found that no one had a structured budget, rather a general basis of spending.  One participant summed this general finding with this response:
 I don’t have anything written down, I just try to keep the general track of what I have in my bank account, just try to stay within a specific amount. I don’t think any college kid has a real good budget; most are probably like me that just have a general idea of what is too much and what’s okay.

Participants do not write down expenditures or rarely kept track of spending.  Students tended to create an allotment of money and make that last as long as possible by being frugal or finding ways to cut back on expenses.  “I don’t really have a budget, it’s more of a restriction.  If I go out a lot one week and go grocery shopping, then ill kind of lay low for awhile before I start spending a lot of money again.”
Our most important findings were our participant’s student loans, and their general feelings about how it affects them currently and their ability to pay off their debt in the future.  As we mentioned earlier, students feel the urgency to pay off their student loan as fast as possible out of college, but when asked if any of their current income goes towards loan payments, most participants responded they just will pay back their loans after college and current income is meant for discretional use.  “I don’t really pay much attention to my loans, I am just going to deal with it after college when it’s over,” seems to be the consensus among our focus group individuals.  Student loans to our participants, even with varying ages of individuals, all agreed that their student loans were not of current concern and are only a problem after graduation. 
With the participant’s student loan repayment in mind, we then asked the individuals about their current consumption compared to if they had no loan.  Our findings have been that a student’s loan does not affect on how they currently consume daily normal goods and their routine purchases.  “I really think for me personally to fret about how much money I’m spending is a waste of energy because I’m going to spend X amount of dollars to live here and enjoy it.”  We found overall, that student loans do not affect every day purchases like groceries, movies, going out, and other nominal purchases.  However, some participants did express that if they did not have a loan they would most likely make big ticket purchases such as a car or TV that they could not normally afford because of their loan. 
Finally, we asked our participants about their future expected earnings and how the current economic situation is affecting them.  For many of the participants in the focus groups, we found that the younger students, freshmen and sophomores, tended to be less worried about finding a job after graduation because there is more time for the job market to turn around.  However, for juniors and seniors, there was more concern.  One participant said, “I’m worried about the future and landing a secure job.  So I can’t be spending all the money I have now…so I’m going to play it pretty conservative now.”  For the participants without a job lined up, there was more concern because without a salary and steady job security, those participants are preparing to expect the worst.

Discussion
    Based on our findings from our focus groups and online surveys, we have come to the conclusion that while in college students are not particularly worried about their loans.  The majority students who responded to the online survey were not worried about their loans, by a large margin.  In addition to that, from our focus groups most of our participants expressed that student loans were not something they would worry about until after they graduated.  It was interesting to see that as the amount of loans increase there was somewhat of a correlation between being worried or not.  This shows that while students are not particularly worried about their loans it is something that they somewhat think about and have in the back of their minds.  We found that students were quick to mention factors that affect how they will pay back their loans after school but no one had an active plan to currently begin payments. 
Another main topic of our research was to examine the effect of loans and current student consumption.  As we predicted and according to our online survey, many of the students responded that student loans do not slow down current consumption.  However, there is a slight connection between people having high amounts of student loans and decreased consumption but nothing that lead us to believe that these two variables are strongly correlated.  As mentioned in the focus group results, when asked if students did not have loans and whether or not it affects their consumption, it does not affect their short term consumption.  Some participants cited minor spending changes in luxury goods if they had no student loans. 
One more topic of our research was to examine student loans and current employment.  Both our online survey and focus groups indicated that having a part time job is mainly for discretionary spending and is not used to pay off student loans.  Students that have a part or full time job are not more likely to have student loan which disproves one of our hypotheses that students with a loan are more likely to hold a job.  Perhaps some reasons for this is that tuition is so expensive it is impossible to finance their way through this university with a typical college student job.  The majority of students surveyed responded they did not have a job and is most likely because students are more focused on completing their degree and do not want any outside distractions. 
The relationship of credit cards and student loans was another topic we addressed.  Our hypothesis was that students who had a loan would be more inclined to be in credit card debt and have higher monthly balances.  However, most students that responded to our survey were not in any kind of dangerous credit card debt.  In fact, 21 out of 188 respondents had credit card debt greater than $100.  Our hypothesis was partially correct because the majority of students who were in high levels of credit card debt also had a student loan. 
One of the reasons we originally thought that students in college were not worried about their loans was because they had high expectations of future wages.  Our reasoning was correct as our online survey indicated that the average expected salary was $50,249.  However, during our focus groups some of our participants expressed worries about the job market and were very pessimistic about earning the salaries they expected.  On the topic on the current economic crisis, more students responded on getting secondary higher education.  Only about 50% of students planned on working full time out of college and 25% are getting masters.  The high amounts of students getting secondary higher education maybe due to the worries of the job market and way to wait out the current recession.

Limitations
Overall, our research provided insight and allowed us to make some implications about student loans and spending habits, however, we did encounter limitations to our research. It was difficult to recruit strangers to take part in focus groups. We believe that our budget of $100 limited the incentives we could have offered students. Perhaps with more funding we could have made the discussions more appealing and would have experienced a higher response rate.  In our online survey, respondents were asked to fill out the survey at their own time expense, and there was no incentive such as a possibility of winning $50, which could have raised our response rate from 8% to a higher percentage. Of the surveys we did receive, we had a large representation of international students, which were not useful results. Also, many students left answers incomplete which made some analysis difficult. Some students even contradicted their own responses in the survey. For example, some students said they didn’t have a loan, but then answered questions about how they were worried about paying them back, or giving additional loan information.
In addition, when recruiting for our focus groups, we had a large amount of surveys filled out and many respondents seemed enthusiastic about attending our focus groups.  However, when we emailed them with a time to meet, we had very low response rates and not enough respondents were willing.  Since we used our focus groups with acquaintances, our focus groups were not a proper random sample of the university. Since we used the snowball approach to recruitment, we were limited to conducting focus groups with males which could have biased some responses.
Another problem we encountered was finding information pertaining to private student loans.  The information we found on student loans came from the financial aid services and did not have information on private loans since private loans are set up between a student and another bank or lending company.   This would make the average student loan data we found to be lower than what it would be because of the lack of representation on private loans.  Additionally, in our online survey students were given a range for their student loans which made them hard to average.  Thusly, it was impossible to find the average student loan from the survey and information available from the university.

Conclusion
     Although we ran into some challenges while conducting our research such as difficulties recruiting for focus groups and less than desired amounts of online survey participants, we were still able to draw a few conclusions about student loans and spending.  We found that students are not particularly worried about their student loans while attending college.  It was also found that a large increase of student loans only decreases spending by a small amount, and does not increase the likelihood of holding a job.  In addition, students have a high expectation of future earnings and use that as a justification for current consumption therefore viewing their debt as non current issue.  Because of this, students want to be able to pay off their student loans however they do not have a plan or budget to be able to pay off their loans earlier than expected. 
    This research has implications towards students on this campus because students are not in a particular hurry or have a set plan to pay off their loans.  Students generally accept the fact that they are going to be in debt.  The rising cost of tuition has become so expensive that most students are forced to take out extra private loans to finance their way through school.  Americans are so in debt in general and have a negative net savings rate and the high cost of education is making this problem worse.  Higher education is now an investment towards an individual’s lifetime earnings.  Authors like Anya Kamenetz argue that higher education is a public good and should not be a private investment.  We feel that policies need to be in place to help students avoid such high amounts of student debt, whether through more federal funding, more grants and tuitions, or lower tuitions.  More research needs to be done to figure out new policies to alleviate financial pressure on students. 








References
Kamenetz, Anya. Generation Debt : How Our Future Was Sold Out for Student Loans, Bad Jobs, Nobenefits, and Tax Cuts for Rich Geezers--and How to Fight Back. New York: Riverhead Trade (Paperbacks), 2007.

Krueger, Richard A., and Mary Anne Casey. Focus Groups : A Practical Guide for Applied Research. Minneapolis: SAGE Publications, Incorporated, 2000.

Williams, Jeffrey J. "Student Debt and The Spirit of Indenture." Dissent (2008): 73-78.



















APPENDIX A: Survey Invite

Subject line: Let your voice be heard!


Invitation to participate in an online survey of University of Illinois undergraduate students

Hi!  We are students in ACE 398.  As part of our course requirements, we are conducting an online survey of University of Illinois undergraduate students.  The survey covers the topics of your spending on food and textbooks, your use of the new ARC, how tuition loans affect your spending, and how you chose to attend the University of Illinois.

So, how will we use the information we collect from you?  In addition to our course papers, we plan to write up short papers with our findings.  Administrators at the university are very interested in our research.  You could benefit, too, as we can use our findings to inform students about how to save on textbooks and food.

Please help us out and click on the link below to access our online survey.  It shouldn’t take you more than 30 minutes to complete, and it would mean a lot to us.

<link here>

Thank you so much!

<Student names here>

APPENDIX B: Online Survey

9. Do you currently have a job?
   Yes, part-time on campus
   Yes, full-time on campus
   Yes, part-time off campus
   Yes, full-time off campus
   No

Please put "0" if you do not work during the school year.
10. How much do you earn each week in your job during the school year on average?
   
11. Did you work during the summer of 2008?
   Yes
   No

12. If yes, how much did you earn on average per week during your summer 2008 job?
   
13. Which of the following sources of income do you have currently? Check all that apply.
   Current job
   Past summer job/internship
   Allowance/family help
   Student loans
   Student scholarships
   Link card
   Other

14. What is your best estimate of the total income you received from October 1,2007 to September 30, 2008? Be sure to include earnings from jobs as well as interest earnings or dividends.
New page
15. Approximately how much is the annual income of your parent(s)? Give your best guess.
   <$10,000
   $10,000-$14,999
   $15,000-$19,999
   $20,000-$24,999
   $25,000-$29,999
   $30,000-$39,999
   $40,000-$49,999
   $50,000-$59,999
   $60,000-$74,999
   $75,000-$99,999
   $100,000-$149,999
   $150,000-$199,999
   $200,000+

16. Do you have a student loan?
   Yes
   No

17. If yes, how much will you have in student loans when you graduate?
   $0 - $4,999
   $5,000 - $9,999
   $10,000 - $19,999
   $20,000 - $29,999
   $30,000+

18. If yes, have you started to pay any of your loans?
   Yes
   No

19. How many years do you think it will take for you to pay off your loans?
   
20. Which of the following best describes how you think having student loans affects your consumption now?
   Increases consumption by a lot
   Increases consumption by a little
   Doesn't affect consumption now
   Decreases consumption by a little
   Decreases consumption by a lot

21. To what extent are you worried that you will not be able to pay off your student loans?
   Very worried
   Somewhat worried
   Not worried at all

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22. Do you receive any kind of financial aid?
   Yes
   No

23. If yes, how much do you receive per year?
   
24. How much is your total tuition and fees per year?
   
25. How much do you spend on room and board per year? (or put down your spending on rent and utilities, if applicable)
   
26. How do you pay for your tuition? (Check all that apply)
   Parents
   Other relatives
   Government aid
   Scholarship
   Self
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27. How many credit cards do you have?
   
28. If you use credit cards, what are your average monthly bills?
   $0 - $49.99
   $50 - $199.99
   $200 - $499.99
   $500 - $999.99
   $1,000 +

29. If you have outstanding bills, how much do you owe towards all your credit cards?
   $0 - $99.99
   $100 - $199.99
   $200 - $499.99
   $500 - $999.99
   $1,000 +

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30. What do you plan to do in the year after graduation? (choose only one option, the one you are most likely to pursue)
   Pursue a Masters degree
   Pursue a Ph.D. or M.D. degree
   Pursue a law degree
   Work full time
   Other

31. What do you expect to earn per year in your first full time job?
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78. What is your gender?
   Male
   Female

79. What year are you in school?
   Freshman
   Sophomore
   Junior
   Senior

80. What College are you currently enrolled in?
   Agricultural, Consumer, and Environmental Sciences
   Applied Health Studies
   Aviation
   Business
   Media
   Division of General Studies
   Education
   Engineering
   Fine and Applied Arts
   Liberal Arts and Sciences
   Nursing
   Other

81. What is your major?
  
Please refrain from abbreviations.
82. What is your age?
   
83. Are you an international student?
   Yes
   No

84. If yes, what country are you from?
  
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88. What is the highest level of education completed by your mother?
   Less than high school
   High school graduate
   Some college
   Bachelor's degree (B.A. or B.S.)
   Some graduate school
   Advanced degree (M.A., Ph.D., J.D., M.B.A., M.S., M.D.)
   Don't know

89. What is the highest level of education completed by your father?
   Less than high school
   High school graduate
   Some college
   Bachelor's degree (B.A. or B.S.)
   Some graduate school
   Advanced degree (M.A., Ph.D., J.D., M.B.A., M.S., M.D.)
   Don't know

90. What is your marital status?
   Single
   Married
   Divorced
   Separated
   Widow/Widower

Please write to 2 decimal places.
91. What is your grade point average (G.P.A.)?
   
92. What is your race/ethnicity?
   African American
   Asian American
   White
   Latino
   Native American





APPENDIX C: Recruitment Survey


The following survey is designed for specific use on a research project for ACE398 designed to determine the relationship between spending habits of college students and tuition loans. This survey complies with Ethnography of the University Initiative guidelines.

Name: __________________________________
Email Address: _______________@illinois.edu
Cell Phone Number:¬¬ (_____)___________________

What year are you? (circle)

Freshman            Sophomore        Junior            Senior

What is your college? (circle)

Business        ACES            Engineering        FAA   

LAS             AHS            Education        COM       

DGS            Aviation        Nursing         Other- Graduate

If you are a senior, are you currently seeking a full time position upon graduation? (circle)

Yes        No
       
Do you have a loan to finance your tuition? (circle)

Yes        No

If yes, how much is your loan annually? (circle)

< $1000        $1,000-$5,000        $5,000-$10,000        $10,000-$20,000        > $20,000

   
If no, how do you finance your tuition? (circle)

Parents                        Financial Aid       

Other (please specify):¬¬¬¬¬¬¬¬¬____________________________

Do you currently have a job? (circle)

Yes        No    

If chosen would you be willing to participate in a focus group that will meet one time for approximately an hour?  Students will be compensated for their time. Details to follow later.

Yes             No

When is the best time for you to meet? (Check all that apply)
    Sunday    Monday    Tuesday    Wednesday    Thursday    Friday    Saturday
Morning (8-12)                           
Afternoon (12-5)                           
Evening (5-10)                           


APPENDIX D: Information Form


RESEARCH PROJECT INFORMATION FORM

Hi.  Our names are Peter Comes, Joe Franzwa, and Everett Sommer, and we are students in ACE 398, a research methods class that is part of the Ethnography of the University initiative here at the University of Illinois.  ACE 398 is taught by Professor Mary Arends-Kuenning.  We are conducting a research project that examines student loans and their effect on spending habits of college students. 

We are distributing a contact information form to find participants in focus group discussions about tuition loans and spending habits.  If you are interested in participating, please fill it out and return it to us.  The focus group discussions will take about 1 to 1.5 hours of your time.  The information you provide will be kept confidential. 

If you do participate, you will be provided with refreshments.

If we choose you for a focus group, we will contact you and send you a survey and a consent form.  Please bring the survey and consent form to the focus group discussion location.  If you do not participate in a focus group, we will destroy your contact information form.

Your participation in this research project is entirely voluntary. Your participation in the study will not affect your grades or academic standing in your program in any way.  You will not be penalized in any way if you do not participate.  There are no known risks in this study beyond those of everyday life.  However, it is possible that we might sometimes talk about personal matters related to your spending habits or time use, and you might therefore feel uncomfortable having the discussion taped.  You don’t have to answer any questions you don’t want to and you can stop the discussion to ask questions at any time.  Also, we can stop the tape at any time if there are portions of the discussion you prefer not to be recorded. 
We ask that all participants in the focus group respect the privacy of the session and do not repeat what other participants say when outside the focus group.  However, we cannot guarantee that all participants will respect other participants’ privacy and confidentiality.
If you have any additional questions, Professor Arends-Kuenning would be happy to answer them.  She can be reached by phone at 217-333-0753 or e-mail at marends@uiuc.edu. Should you have any questions concerning research subject's rights, you can contact the University of Illinois Institutional Review Board Office, 1-01-(217) 333-2670; e-mail irb@uiuc.edu. The Institutional Review Board is the office at the University of Illinois responsible for protecting the rights of human subjects involved in studies conducted by University of Illinois researchers.  You are welcome to call collect if you identify yourself as a research participant.
We hope that you will volunteer to participate in our research project.

APPENDIX E: Focus Group Invite


Hello,

We are writing to you in response of a survey that you recently filled out.  We are conducting focus groups to aid us in our research that deals with student loans and their effect on spending habits.  Your participation will tremendously help us with out project.

The group should take no longer than an hour. Pizza and refreshments will be provided and participants will receive a $10 gift card to Best Buy.

The times we have set are as follows:

Wednesday, November 19 at 6:30 PM in 313 Mumford Hall
Thursday, November 20 at 6:30 PM in 313 Mumford Hall

Please respond to this email if you would like to participate and give the time that works best for you.

Thank you in advance for your participation,

Peter Comes

--
Peter Anthony Comes
University of Illinois
Consumer Economics and Finance

APPENDIX F: Data Results from Online Survey





Table 2
               
Relationship between Loan Amount and being worried about loan
Amount of Loan    Very Worried    Somewhat Worried    Not Worried    Total
$0-$4,999    0    6    56    62
$5,000-$9,999    0    8    12    20
$10,000-$19,999    4    21    20    45
$20,000-$29,999    4    13    6    23
$30,00+    11    23    12    46
Total    19    71    106    196



Table 3
       
How Tuition Loan affects consumption
Effect on Consumption    Frequency    Percentage
Increases a lot    5    2.55
Increases a little    13    6.63
No effect    113    57.65
Decreases a little    44    22.45
Decreases a lot    21    10.71
Total    196    100









Table 4
                       
    Effect on Consumption based on Loan amount
Amount of Loan    Increases Consumption A lot    Increase Consumption a little    No Effect    Decreases Consumption a lot    Decreases Consumption a little    Total
$0-$4,999    0    1    55    5    2    63
$5,000-$9,999    0    1    14    5    0    20
$10,000-$19,999    3    4    18    13    7    45
$20,000-$29,999    0    4    8    8    3    23
$30,00+    2    3    18    13    9    45
Total    5    13    113    44    21    196



Table 5
       
Employment Break Down
Job-Type    Frequency    Percentage
Part-time on campus    99    36.13
Full-time on campus    2    0.73
part-time off campus    27    9.85
Full-time off campus    2    0.73
No Job    144    52.55
Total    274    100









Table 6        Table 7
                       
Relationship between having a loan and having a job        Breakdown of Credit Card Debt Amount
    Has Loan             Credit Card Debt Amt.    Frequency    Percentage
Job-Type    Yes    No        $0-$99.99    167    88.83
Part-time on campus    48    51        $100-$199.99    4    2.13
Full-time on campus    1    1        $200-$499.99    4    2.13
Part-time off campus    17    10        $500-$999.99    6    3.19
Full-time off campus    2    0        $1000+    7    3.72
No Job    59    85        Total    188    100
Total    127    147               


Table 8        Table 9
                           
Relationship between Credit Card Debt amount and Having a Loan        Plans After Graduation
    Has Loan                   
Credit Card Debt Amt.    Yes    No    Total        Plans     Frequency    Percentage
$0-$99.99    79    88    167        Masters    69    25.65
$100-$199.99    2    2    4        PhD or MD    38    14.13
$200-$499.99    2    2    4        Law    12    4.46
$500-$999.99    5    1    6        Full-tim Job    134    49.81
$1000+    6    1    7        Other    16    5.95
Total    94    94    188        Total    269    100


   







APPENDIX G: University of Illinois Student Loan Info

Year    Number of Graduating Seniors    % increase    Number of Student Borrowers    % increase    % of Graduating Seniors Who Borrowed Student Loans    Average Student Loan Debt of Graduating Seniors    % increase
2003-04    5,785    ---    2,754    ---    48%     $         13,494.00     ---
2004-05    6,535    12.96%    3,219    16.885%    49%     $         14,776.00     9.50%
2005-06    6,494    -0.63%    3,297    2.423%    51%     $         15,641.00     5.85%
2006-07    6,896    6.19%    3,500    6.157%    51%     $         17,058.00     9.06%
2007-08    6,892    -0.06%    3,478    -0.629%    50%     $         17,938.00     5.16%
    Net increase    18.47%    Net Increase    24.836%        net Increase    29.57%


Year    Total Amount Borrowed    % Increase
2003-2004    83,434,981    ---
2004-2005    97,997,807    17.454%
2005-2006    111,372,929    13.648%
2006-2007    121,824,395    9.384%
    Net Increase    40.487%

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