Making Sense of Loan Aversion: Evidence From Wisconsin

• In Event: Economic and Financial Factors in College Access and Persistence: The Good, Bad, and Terrible?

Abstract

We explore the extent of loan aversion among a sample of Pell Grant recipients attending Wisconsin public colleges and universities. We observe loan aversion using survey measures of loantaking preferences and actual loan offers and acceptances using administrative data, and the two measures often contradict each other with loan-averse students in survey data having actually taken out loans. This suggests that the amount of loan aversion may be overstated in studies which rely on survey data. Finally, after controlling for student demographic characteristics and other factors, we are able to explain many of the demographic variations in loan takeup rates.

Authors

• Sara Goldrick-Rab, University of Wisconsin Madison

• Robert Kelchen, Seton Hall University