Family Background and Student Loan Repayment After Graduation

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Abstract

This study examines whether family background is associated with college graduates’ student loan repayment. Although previous studies have appreciated that higher education attenuates the parental effects on children’s education, occupation, and earnings, researchers have only begun to understand whether parents’ socioeconomic status is related to children’s debt repayment after graduation. College students have increasingly relied on student loans to manage rising college tuition, and education debt burdens have become an important factor in determining their economic wellbeing after graduation. Using datasets from the National Survey of College Graduates (NSCG) in 2013, 2015, and 2017, this research investigates whether the association between the amount students borrowed for higher education and the amount they still owed at the survey reference year differ by their family background. Our findings show that, among college graduates who borrowed the same amount of student loan, those from low-SES families hold more education debt at the time of survey compared to their counterparts from high-SES families, after controlling for their own education level, occupation, earnings, and other labor market characteristics. The results suggest that education debt burdens accumulated through higher education plays a role in maintaining the intergenerational socioeconomic association among college graduates.

Authors

• Byeongdon ("Don") Oh, Portland State University

• ChangHwan Kim, University of Kansas