U.S. student loan programs and their impacts on students of low-socioeconomic status: a review of the literature

Abstract

This thematic review of the literature seeks to analyze current understandings of U.S. student loan programs (SLPs) and their impacts on students of low-socioeconomic status across the student life cycle. SLPs are now a mainstay of higher education (HE) financing policy in the U.S., but the significant rise in national student debt (now over $1.4 trillion) represents an increasingly prominent social, political, and economic concern (The White House, 2019). Assessment of higher education funding policies, particularly student loan programs, is imperative to maintaining and progressing educational equity. This is particularly important for students of low-socioeconomic status (low-SES), who may be more vulnerable to the risks associated with student debt. To assess current understandings of SLPs, this paper utilizes a thematic review of the literature, referencing works published from January 1, 2008 to June 30, 2019 and primarily sourced from two databases managed by EBSCO (a leading provider in research databases): Education Information Resources Center and the Professional Development Collection. I demonstrate that student loan programs – through their negative impacts on HE access, experiences, and outcomes – have exacerbated existing HE challenges: debt aversion, complexity of processes, financial illiteracy, stringent admissions standards, unmet need, part/full-time work, degree incompletion, and loan default. These impacts of student loan programs are driving low-SES students into nonselective, less successful HEIs. This further stratification of higher education undermines their potential returns on their educational investment. In this way, contemporary student loans have evolved into an “imperfect tool to reduce educational inequality” (Baker et al., 2017, p.8), but may be more a “symptom” than “cause” (Eden, 2016, p.3) of the educational inequity experienced by low-SES students striving for higher education.