Balancing Passion and Practicality: The Role of Debt and Major on Students' Financial Outcomes. A Report to the 83rd Regular Session of the Texas Legislature
Author: Neal, Micki
Date: 2012-08-00
Type: Reports - Descriptive
Subjects: College Students,Majors (Students),Debt (Financial),Student Loan Programs,Tuition,Fees,Employment,Education Work Relationship,Income,Occupations,Educational Attainment,High School Graduates,College Graduates,Associate Degrees,Bachelors Degrees,Doctoral Degrees,Masters Degrees,Business Administration Education,Unemployment,Case Studies

As the cost and importance of education continue to rise, more college students across the U.S. begin their postsecondary education by signing a contract to repay an ever-increasing amount of student loan debt. Conventional wisdom maintains that borrowing for college is an investment in the future that should be deemed &quot;good debt&quot;. Data confirm that income typically increases as level of education increases. One million dollars is the oft-cited figure representing the difference in lifetime earnings between an individual with a bachelor's degree and one with a high school diploma. However, incomes also vary widely within the same level of education. How many students who are currently relying on student loans to finance their education will earn the income required to repay their debt successfully? This report provides examples of occupations pursued by graduates with the same level of education and reveals the extent to which the variation in income is related to undergraduate academic major. The problem is that students with different income prospects resulting from their major may borrow the same amount to finish college. Consequently, their corresponding debt-to-income ratios, which determine the ease with which they will be able to repay their student loans, will differ. Higher debt-to-income ratios are associated with greater repayment challenges. This report also analyzes results from six case studies--three Texas institutions and three non-Texas institutions. Although staff and administrators at these institutions rarely mentioned programs or policies that specifically addressed their students' debt-to-income ratios, they did engage in activities that promote responsible borrowing and career planning. Suggested strategies for encouraging manageable debt-to-income ratios are highlighted throughout the report. Appended are: (1) Debt-to-Income Ratio Estimates for Four-Year Institutions; (2) sample questions provided to each institution prior to its site visit; (3) Top Occupations for High School Diploma Holders in the U.S. (2010); (4) Top Occupations for Associate Degree Holders in the U.S. (2010); (5) Most Popular Bachelor's Degree Occupations for Popular Majors in the U.S. (2010); (6) Most Popular Bachelor's Degree Occupations for Business Management and Administration Majors in the U.S. (2009); and (7) Majors with Highest Unemployment Rates in the U.S. (2010) A bibliography is included. (Contains 4 figures, 19 tables, and 21 footnotes.) [Funding for this paper was provided by the Council for Student Financial Success in Higher Education. For related report, &quot;Balancing Passion and Practicality: The Role of Debt and Major on Students' Financial Outcomes. Research Report,&quot; see ED542016.]