Credit Access and the College-Persistence Decision of Working Students: Policy Implications for New England. Research Report 23-2
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| Title: | Credit Access and the College-Persistence Decision of Working Students: Policy Implications for New England. Research Report 23-2 |
|---|---|
| Language: | English |
| Authors: | Pinghui Wu, Lucy McMillan, Federal Reserve Bank of Boston, New England Public Policy Center |
| Source: | Federal Reserve Bank of Boston. 2023. |
| Availability: | Federal Reserve Bank of Boston. P.O. Box 55882, Boston, MA 02205. Tel: 617-973-3000; Tel: 617-973-3397; e-mail: boston.library@bos.frb.org; Web site: https://www.bostonfed.org/ |
| Peer Reviewed: | N |
| Page Count: | 24 |
| Publication Date: | 2023 |
| Document Type: | Reports - Evaluative |
| Education Level: | Higher Education Postsecondary Education |
| Descriptors: | Student Employment, Academic Persistence, Student Attitudes, Educational Policy, Tuition, Student Costs, College Students, Dropouts, Dropout Rate, Credit (Finance), Job Layoff, Paying for College |
| Abstract: | Every year, 2 million first-time, full-time undergraduate students enter a degree-granting postsecondary institution in the United States, but more than one-third leave college before obtaining a college degree. This report's analysis shows that job loss has an adverse effect on college persistence for 18- to 24-year-old US working students, that is, whether those students remain in college. Although the effect was minimal during the 2000-08 period, it became significantly magnified after 2008. It is estimated that from the 2009-10 through 2019-20 academic years, involuntary job loss led to a 17 percentage point increase in a working student's probability of dropping out of college in the next academic year. The authors find supporting evidence that the stronger effect in the later period reflects college students' more restricted access to credit card loans after the passage of the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009, which imposed tight restrictions on credit extension to individuals who are younger than 21 or older but enrolled in college. For many working students who have difficulty acquiring alternative forms of credit, credit card loans serve as a crucial means of smoothing consumption when income fluctuates. Tightening of the credit card market has a direct impact on these students. This report's findings suggest that employment stability plays a pivotal role in the retention of young working students, and a small contingency fund goes a long way in preventing college dropout due to temporary employment disruptions. While the underlying analysis was conducted using national data, the findings are relevant to New England, where higher education employs 4 percent of the region's workforce, more than twice the national average. Student retention therefore carries implications not only for the individual students seeking a college education, but also for the vitality of the region's labor market. An important caveat is that the report's findings do not imply that credit card loans improve college students' net welfare. While access to credit card loans improves persistence in the short run for unemployed college students, a large credit card debt leads to other adverse consequences and is unlikely the optimal solution to liquidity issues. Instead, the significance of credit card loans in the personal finance of working students reflects a dearth of alternative income assistance to compensate for short-term earnings loss. Extending timely unemployment assistance to college students through either unemployment insurance or student financial aid programs could potentially insure these students against unforeseen job-loss risks and yield retention benefits. Policymakers concerned with the retention of working college students should consider these options and explore them to a greater degree. |
| Abstractor: | As Provided |
| Entry Date: | 2024 |
| Access URL: | https://www.bostonfed.org/publications/new-england-public-policy-center-research-report/2023/credit-access-and-the-college-persistence-decision-of-working-students.aspx |
| Accession Number: | ED646967 |
| Database: | ERIC |
| FullText | Text: Availability: 0 CustomLinks: – Url: https://eric.ed.gov/contentdelivery/servlet/ERICServlet?accno=ED646967 Name: ERIC Full Text Category: fullText Text: Full Text from ERIC |
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| Items | – Name: Title Label: Title Group: Ti Data: Credit Access and the College-Persistence Decision of Working Students: Policy Implications for New England. Research Report 23-2 – Name: Language Label: Language Group: Lang Data: English – Name: Author Label: Authors Group: Au Data: <searchLink fieldCode="AR" term="%22Pinghui+Wu%22">Pinghui Wu</searchLink><br /><searchLink fieldCode="AR" term="%22Lucy+McMillan%22">Lucy McMillan</searchLink><br /><searchLink fieldCode="AR" term="%22Federal+Reserve+Bank+of+Boston%2C+New+England+Public+Policy+Center%22">Federal Reserve Bank of Boston, New England Public Policy Center</searchLink> – Name: TitleSource Label: Source Group: Src Data: <searchLink fieldCode="SO" term="%22Federal+Reserve+Bank+of+Boston%22"><i>Federal Reserve Bank of Boston</i></searchLink>. 2023. – Name: Avail Label: Availability Group: Avail Data: Federal Reserve Bank of Boston. P.O. Box 55882, Boston, MA 02205. Tel: 617-973-3000; Tel: 617-973-3397; e-mail: boston.library@bos.frb.org; Web site: https://www.bostonfed.org/ – Name: PeerReviewed Label: Peer Reviewed Group: SrcInfo Data: N – Name: Pages Label: Page Count Group: Src Data: 24 – Name: DatePubCY Label: Publication Date Group: Date Data: 2023 – Name: TypeDocument Label: Document Type Group: TypDoc Data: Reports - Evaluative – Name: Audience Label: Education Level Group: Audnce Data: <searchLink fieldCode="EL" term="%22Higher+Education%22">Higher Education</searchLink><br /><searchLink fieldCode="EL" term="%22Postsecondary+Education%22">Postsecondary Education</searchLink> – Name: Subject Label: Descriptors Group: Su Data: <searchLink fieldCode="DE" term="%22Student+Employment%22">Student Employment</searchLink><br /><searchLink fieldCode="DE" term="%22Academic+Persistence%22">Academic Persistence</searchLink><br /><searchLink fieldCode="DE" term="%22Student+Attitudes%22">Student Attitudes</searchLink><br /><searchLink fieldCode="DE" term="%22Educational+Policy%22">Educational Policy</searchLink><br /><searchLink fieldCode="DE" term="%22Tuition%22">Tuition</searchLink><br /><searchLink fieldCode="DE" term="%22Student+Costs%22">Student Costs</searchLink><br /><searchLink fieldCode="DE" term="%22College+Students%22">College Students</searchLink><br /><searchLink fieldCode="DE" term="%22Dropouts%22">Dropouts</searchLink><br /><searchLink fieldCode="DE" term="%22Dropout+Rate%22">Dropout Rate</searchLink><br /><searchLink fieldCode="DE" term="%22Credit+%28Finance%29%22">Credit (Finance)</searchLink><br /><searchLink fieldCode="DE" term="%22Job+Layoff%22">Job Layoff</searchLink><br /><searchLink fieldCode="DE" term="%22Paying+for+College%22">Paying for College</searchLink> – Name: Abstract Label: Abstract Group: Ab Data: Every year, 2 million first-time, full-time undergraduate students enter a degree-granting postsecondary institution in the United States, but more than one-third leave college before obtaining a college degree. This report's analysis shows that job loss has an adverse effect on college persistence for 18- to 24-year-old US working students, that is, whether those students remain in college. Although the effect was minimal during the 2000-08 period, it became significantly magnified after 2008. It is estimated that from the 2009-10 through 2019-20 academic years, involuntary job loss led to a 17 percentage point increase in a working student's probability of dropping out of college in the next academic year. The authors find supporting evidence that the stronger effect in the later period reflects college students' more restricted access to credit card loans after the passage of the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009, which imposed tight restrictions on credit extension to individuals who are younger than 21 or older but enrolled in college. For many working students who have difficulty acquiring alternative forms of credit, credit card loans serve as a crucial means of smoothing consumption when income fluctuates. Tightening of the credit card market has a direct impact on these students. This report's findings suggest that employment stability plays a pivotal role in the retention of young working students, and a small contingency fund goes a long way in preventing college dropout due to temporary employment disruptions. While the underlying analysis was conducted using national data, the findings are relevant to New England, where higher education employs 4 percent of the region's workforce, more than twice the national average. Student retention therefore carries implications not only for the individual students seeking a college education, but also for the vitality of the region's labor market. An important caveat is that the report's findings do not imply that credit card loans improve college students' net welfare. While access to credit card loans improves persistence in the short run for unemployed college students, a large credit card debt leads to other adverse consequences and is unlikely the optimal solution to liquidity issues. Instead, the significance of credit card loans in the personal finance of working students reflects a dearth of alternative income assistance to compensate for short-term earnings loss. Extending timely unemployment assistance to college students through either unemployment insurance or student financial aid programs could potentially insure these students against unforeseen job-loss risks and yield retention benefits. Policymakers concerned with the retention of working college students should consider these options and explore them to a greater degree. – Name: AbstractInfo Label: Abstractor Group: Ab Data: As Provided – Name: DateEntry Label: Entry Date Group: Date Data: 2024 – Name: URL Label: Access URL Group: URL Data: <link linkTarget="URL" linkTerm="https://www.bostonfed.org/publications/new-england-public-policy-center-research-report/2023/credit-access-and-the-college-persistence-decision-of-working-students.aspx" linkWindow="_blank">https://www.bostonfed.org/publications/new-england-public-policy-center-research-report/2023/credit-access-and-the-college-persistence-decision-of-working-students.aspx</link> – Name: AN Label: Accession Number Group: ID Data: ED646967 |
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| RecordInfo | BibRecord: BibEntity: Languages: – Text: English PhysicalDescription: Pagination: PageCount: 24 Subjects: – SubjectFull: Student Employment Type: general – SubjectFull: Academic Persistence Type: general – SubjectFull: Student Attitudes Type: general – SubjectFull: Educational Policy Type: general – SubjectFull: Tuition Type: general – SubjectFull: Student Costs Type: general – SubjectFull: College Students Type: general – SubjectFull: Dropouts Type: general – SubjectFull: Dropout Rate Type: general – SubjectFull: Credit (Finance) Type: general – SubjectFull: Job Layoff Type: general – SubjectFull: Paying for College Type: general Titles: – TitleFull: Credit Access and the College-Persistence Decision of Working Students: Policy Implications for New England. Research Report 23-2 Type: main BibRelationships: HasContributorRelationships: – PersonEntity: Name: NameFull: Federal Reserve Bank of Boston, New England Public Policy Center – PersonEntity: Name: NameFull: Pinghui Wu – PersonEntity: Name: NameFull: Lucy McMillan IsPartOfRelationships: – BibEntity: Dates: – D: 01 M: 12 Type: published Y: 2023 Titles: – TitleFull: Federal Reserve Bank of Boston Type: main |
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