What are Student Loan Borrowers Thinking? Insights from Focus Groups on College Selection and Student Loan Decision Making

Personal Finance March 03, 2017 Print Friendly and PDF

Johnson, C. L., O’Neill, B., Worthy, S., Lown, J. M., Bowen, C. F. (2016). What are student loan borrowers thinking? Insights from focus groups on college selection and student loan decision making. Journal of Financial Counseling and Planning, 27(2), 184-198.

Brief Description: This study used data from online focus groups to understand college students’ decision-making process when borrowing money to finance their education. Respondents were asked eight questions regarding their college selection and student loan decision-making. Results suggest that (a) students relied heavily on advice from parents, guidance counselors, and friends; (b) attending college was not possible without student loans; and (c) students knew very little about the loans they would be responsible for repaying.

Implications: The collected qualitative data paints a picture of students who felt they had no other choice but to borrow money to invest in their human capital to secure a better future. Financial educators and counselors should help student loan borrowers make informed decisions about education and debt. The authors determined the following areas to be important for practitioners: simplify student loan decisions; provide “reputation resources”; increase loan repayment awareness; increase online student loan resource awareness; address the social and emotional impacts; explore cost reduction alternatives; explore differentiation techniques; discourage frivolous spending of student loan refunds; explore graduate school funding resources; and encourage immediate savings.