Student Loans, Financial Stress, and College Student Retention

This study examined a sample of 2,475 undergraduate students to determine the influence of financial stress, debt loads, and financial counseling on retention rates. Results indicate, among other findings, that financial stress contributes to an increased likelihood of discontinuing college. Self-reported student loan debt contributes to an increased likelihood of discontinuing college, although students with the highest amount of university-reported student loan debt have a decreased likelihood of discontinuing college one year later as compared to students with no student loan debt. Interestingly, in this study students who sought financial counseling were more likely to discontinue college within the next year. Although this contradicts prior studies that have shown that students experience less financial stress immediately after meeting with a peer counselor and for two months later, it is suggested that the timing of the counseling may be an important factor. Implications for practice include early intervention for students who are self funding their education, who are under high financial stress, or have a perception of high student loan debt. At the campus level, financial aid professionals should collaborate with personal finance researchers to better understand how financial stress and student debt relate to retention.