Introduction
It is estimated that student debt is a fast growing type of loan for those who cannot afford to pay for their education (Soederberg 2014; Fraser 2016; Shermer 2015). Ross (2013) says that the growing appetite for student debt can be a source of conflict for students, governments and employers. Indeed, it is common to find students with debts, which run into tens of thousands of pounds without a clear plan of how to pay them.
Consequently, there has been an outcry among students that the burgeoning debt burden will have a negative impact on their lives for decades (Shireman 2017; Martin 2017; Houle & Warner 2017). Since the size of student debt is rising, a proposal is contained in this document to assess the effects that high student debts have on higher education in the U.K. The importance of undertaking this study is characterised by the fact that high debt levels could affect student requirements and human capital resource distribution in higher education (Martin 2017; Houle & Warner 2017).
Approach
The sources used in this review were obtained from reputable databases – Sage Journals and Science Direct. The keywords used to search for the articles were âhigher education,â âstudent debt,â and âthe United Kingdom.â The researcher made an effort to include only reputable research materials in the review. Therefore, journals were the main research materials sampled. Particularly, the researcher made an effort to include articles that were based on empirical research and that focused on the United Kingdom.
However, the inclusion and exclusion criteria were characterised by timelines, which define when the research studies were published. In line with this vision, only studies that were published within the past five years (between 2013 and 2018) were included in the review. The exclusion criterion was defined by the omission of research materials that were published earlier than 2013. The aim of employing this search strategy was to get updated research materials for review.
Literature Review
Introduction
This section of the paper highlights what other researchers have said about the topic of study. At the end of the review, a research gap, which justifies the need to conduct the proposed study, will be provided. Understanding the effects of student debt in the U.K. higher education sector will also provide information for policymakers to rethink the structure of student debt as envisioned in the work of Cole and Heinecke (2018), which proposes the need to reimagine higher education.
This literature review is structured in a way that a background of the review is provided, the main themes that emerged from a review of previous studies are discussed, and information relating to the techniques employed to get the research materials for review highlighted. In the end, a conclusion highlighting the research gap is provided.
Information about Sources
The sources used in this review were mainly journals, which contained information relating to the research topic, which is assessing the effects of educational loans on higher education in the U.K. Table 1 below explains the search terms
Table 1. Search Terms.
The sources used were gathered after looking for citations from key sources. The research is limited to the U.K. because this is where the researcher is domiciled. Sage Journals and Science Direct were the main databases consulted. The themes that emerged from the sources reviewed are highlighted below.
Key Themes in the Literature
It is often difficult to quantify the value of education because students can acquire valuable skills that would change their lives. However, the cost of acquiring this education is quantifiable and researchers have pointed out that the figures are staggering (Shireman 2017; Martin 2017; Houle & Warner 2017). This is why many students take debts to finance their education. Consequently, a student debt crisis has emerged because of the financial implications that loans have on their lives.
Effects of Demographics on Student Debt
According to Callender and Mason (2017), there are economic disparities between how different types of students take debt. After conducting a U.K.-based study, Callender and Mason (2017) explained that student attitudes towards debt were more favourable in 2015 compared to 2002. The study also showed that students who came from low-income families were more averse to debt, relative to those who hailed from the upper classes of the U.K. society. Morrison (2014) also supported the same findings because he suggested that students who came from low-income families mostly shouldered the burden of student debt.
The link between student debt and economic classes underscores the role of parents in influencing studentsâ decisions to take debt. Houle (2014) investigated this phenomenon and found out that the relationship between a parentâs income and student debt was non-linear. In other words, students who came from middle-income families had a higher risk of debt compared to those who came from low-income families.
The study also found that students who had college-educated parents or hailed from high-income families were debt-averse. Disparities in student debt have also been investigated from racial and ethnic lines, as highlighted in the works of Houle and Addo (2018), which showed that racial minorities (especially black youth) were likely to be negatively affected by student debt more than any other racial group. The study also established that the black-white divide persisted in society, because of student debt, social background differences and post-secondary experiences (Houle & Addo 2018).
Seamster and Charron-Chénier (2017) also investigated the black-white disparities in student debt and reported that education loans were the only type of debt, which did not reset to the pre-crisis stage of the 2007/2008 economic meltdown. Notably, the researchers showed that the divide between blacks and whites further increased in the last decade because of the student debt gap (Seamster & Charron-Chénier 2017). These insights show that student debt has a stronger impact on the educational growth and development of racial minorities and students from low-income families compared to any other racial or socioeconomic group.
Negative Effects of Student Debt
The negative effects of student debt also emerged as a strong theme among the studies reviewed. For example, Zhan, Xiang and Elliott (2018) said student debt had a negative effect on the social and economic development of graduates. Supported by the views of Sieg and Wang (2018), Zhan, Xiang and Elliott (2018) also reported that student debt had a significant effect on career choices, marriage decisions, and home ownership prospects.
Other studies suggest that high student debt could detrimentally affect the health of graduates, their financial well-being after graduation, and even the decision regarding whether to have children or not (Shireman 2017; Martin 2017; Houle & Warner 2017).
A study conducted by Ferretti, Jones and McIntosh (2015) to assess the effects of educational loans on students in the biomedical science sector pointed out that it affected the allocation of resources in research and development. The study also showed that high levels of student debt had a negative effect on the economic growth of societies (Ferretti, Jones & McIntosh 2015). The negative effects of student debt have also been highlighted in a study conducted by Sieg and Wang (2018), which was meant to estimate its impact on the careers, education, and marriage choices of young lawyers. Collectively, these views suggest that students have been forced to delay marriages and experience low quality education because of debts owed.
The effects of student debt on higher education have been examined in a Chinese-based study conducted by Huang et al. (2018) who found out that debt did not help to increase the academic performance of its beneficiaries. The researchers also established that need-based grants had a negative or neutral impact on academic performance (Huang et al. 2018). The same results were reported to be true for the financial aid programs available in China because the researchers did not document any significant improvements in studentsâ academic performance (Huang et al. 2018).
In sum, the researchers suggested that expanding the reach of financial aid in China could undermine the quality of education in the country (Huang et al. 2018). Although most of the studies sampled in this paper have shown that student debt could have a negative effect on the lives of graduates, some studies suggest that debt is also associated with several positive effects, such as increased access to education. This theme is discussed below.
Positive Effects of Student Debt
A study by McKinney et al. (2015) suggested that although many students considered borrowing as a last resort, they deemed it a tool for improving their academic achievement and success. The researchers also pointed out that the debt crisis has been partly compounded by the poor assessment of college students regarding the implications of borrowing (McKinney et al. 2015).
Relative to the above assertions, Baker and Doyle (2017) investigated the effects of student debt on credit score performance for students who studied at a community college in the US. The researchers postulate that students who had high debts completed fewer credit hours relative to those who did not have debt (Baker & Doyle 2017). The researchers also suggested that the effects of student debt are often not profound on the academic performance of students many years after enrolment (Baker & Doyle 2017).
The effects of student debt on higher education have also been explored from a professorâs point of view because these professionals also incur debt to advance their education. In a U.K.-based study, Hormel and McAlister (2017) pointed out that most professors tend to disassociate their debt problem with those of other students. They contend that this perception distracts people from addressing the problem of rising student debt holistically (Hormel & McAlister 2017). Indeed, they point out that if the trend continues, the high cost of debt in the education sector could significantly result in the exclusion of minority populations from the education sector and undermine diversity in the same field (Hormel & McAlister 2017).
Summary
The research studies sampled in this review have shown that student debt has both positive and negative effects. Most of the journals reviewed have investigated the effects of education loans from economic and social perspectives. The findings have also pointed out that student debt has a negative impact on the economic growth and social development of graduates when they leave school. This review has also indicated that differences in student debt appetite reflect racial and economic differences in society.
In line with this finding, several studies have shown that racial minorities and students from low-income families are more vulnerable to the effects of debt compared to their peers from upper-class families. In addition, most of the studies sampled have investigated the general impact of education loans and not their specific effects on tertiary education in the U.K. Therefore, the gap in literature is the failure of researchers to contextualise the effects of student debt on higher education in the U.K. In line with this research gap, Future research should consider understanding the unique social, political and economic dynamics that influence the relationship between student debt and higher education. The proposed study will partially fill this research gap by focusing on the U.K.
Conclusion
Based on the information provided in this document, it is plausible that what people know about the effects of student debt are largely generalised. This paper has also shown that the student debt problem is a growing issue and its effects on higher education and the lives of students are yet to be understood. However, gaining insight into this topic requires a proper understanding of the economic, social, political and economic dynamics of a community to comprehend its effects on higher education. Based on this observation, this paper contains a proposal to understand the effects of education loans on higher education in the U.K.
The findings will be useful to policymakers who may want to formulate laws to protect the economy from the risk of defaulting or improve the welfare of its graduates by protecting them from the negative effects of debt. The debate about the effects of student debt on the education sector is still ongoing and more is yet to be understood regarding the extent of its effects on the U.K. higher education sector.
Reference List
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