Racial Disparities in Return on Investment: An Analysis of Student Loans in American Higher Education (75895)

Session Information: Higher Education
Session Chair: George Amurao

Friday, 24 November 2023 11:45
Session: Session 2
Room: Room 604
Presentation Type: Oral Presentation

All presentation times are UTC + 9 (Asia/Tokyo)

This research delves into the return on investment (ROI) of student loans in American higher education, with an emphasis on racial disparities, notably among Black graduates. Drawing data from the U.S. Department of Education's College Scorecard and the Georgetown University Center on Education and the Workforce, a panel regression model was employed to evaluate variables like 10-year NPV and Earnings-price return. Preliminary results signify that while the payback period for college education investments has elongated for all students, it's notably worse for Black students. Heterogeneity tests further elucidated the moderating effects of gender, race, public versus private institutions, school attributes, and graduation rates.

These findings hold profound policy implications. Recognizing the substantial influence of student loans on higher education ROI, policymakers are urged to reevaluate and innovate the student loan landscape, drawing inspirations from studies like Kelchen (2018) and Dynarski and Kreisman (2013) which recommend targeted interventions and simplification of the loan system, respectively. In conclusion, the decision to invest in higher education via student loans is intricate and pivotal. Though they democratize access to education, unmanaged student loans can be financially burdensome. Enhancing financial literacy, leveraging technology, and understanding global and institutional trends are paramount to maximize the ROI in higher education through student loans, ensuring equitable economic outcomes and opportunities.

Xuefan Li, University of Toronto, Canada
Wen Li, Southwestern University of Finance and Economics, China
Yuxiang Cheng, Peking University, China
Donghua Li, City High School, Canada

About the Presenter(s)
Dr XUEFAN LI is a University Doctoral Student at University of Toronto in Canada

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Posted by Clive Staples Lewis

Last updated: 2023-02-23 23:45:00