New research shows more student borrowing is connected to greater academic success — at least at community colleges — and indicates reduced borrowing could lead to higher loan defaults.
The student debt crisis has become ubiquitous in headlines and even in the mouths of some lawmakers.
New research, though, suggests that if many students are taking out unnecessary loan debt, others aren’t borrowing enough to support their pursuit of a degree.
The studies found that community college students who borrow more have stronger academic outcomes than those who took out fewer loans or reduced their borrowing. And one experiment involving Maryland community college students found that positive effects of increased borrowing carry over to students’ financial well-being after college — whether or not they actually completed the degrees.
As both federal officials and college administrators raise concerns about overborrowing, the new research points to the possible downsides of messaging that could make low-income students averse to loan debt.