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Decision-making and graduate school debt: a focus on master's degree students

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Content Running head: DECISION-MAKING AND GRADUATE SCHOOL DEBT i

DECISION-MAKING AND GRADUATE SCHOOL DEBT:
A FOCUS ON MASTER’S DEGREE STUDENTS

by

Isabel Morales

A Dissertation Presented to the
FACULTY OF THE USC ROSSIER SCHOOL OF EDUCATION
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degree
DOCTOR OF EDUCATION

May 2014

Copyright 2014 Isabel Morales
DECISION-MAKING AND GRADUATE SCHOOL DEBT ii

Dedication
This degree has never been about just me. It is about the responsibility to pave a path for
my family, my students, and my community, to whom I dedicate this degree. You’re the reason I
went to school, and you’re the reason I stayed in school. Just as you and I have inspired one
another, I hope that you continue to inspire others with your own amazing feats.
I would like to give special thanks to Ronald McNair, the CGU Ronald McNair Scholars
Program, and the Institute for the Recruitment of Teachers for expanding my understanding of
attainable academic and professional possibilities. Without the support I received from these
programs, I never would have pursued a doctorate.
Thank you, Jessie, for believing in me, for loving me, and for encouraging me to do this.

DECISION-MAKING AND GRADUATE SCHOOL DEBT iii

Acknowledgements
We are grateful to our dissertation committee members, Dr. Tatiana Melguizo, Mr.
Robert Shireman, and Dr. William G. Tierney, for their feedback and guidance. A special thank
you to our committee chair, Dr. Kristan Venegas, for her unyielding support throughout this
process.

DECISION-MAKING AND GRADUATE SCHOOL DEBT iv

Table of Contents
Dedication ii
Acknowledgements iii
List of Tables vi
List of Figures vii
Abstract viii
Chapter One: Overview of the Study 1
Background of the Problem 2
Purpose of the Study 4
The Decision-Making Process 4
Overview of Theoretical Framework 5
Overview of the Methodology 7
Significance of the Study 8
Key Definitions 9

Chapter Two: Literature Review 16
Student Perceptions about Debt 17
Effects of Undergraduate Debt on Graduate Enrollment 20
Perceptions about the Value of a Degree 25
Financial Aid Decision-making 27
Student Decision Making 30
Conceptual Framework: Bronfenbrenner’s Bioecological Model of
Human Development 34
Process-Person-Context-Time (PPCT) 36
Bronfenbrenner’s Work within Related Research 38
Bronfenbrenner and the proposed study 41

Chapter Three: Methodology 44
Definition of Research Approach 45
Sample and Population 47
Sampling Strategy 48
Site Selection 48
Instrumentation 48
Data Collection 49
Data Analysis 50
Validity 52
Limitations 54

DECISION-MAKING AND GRADUATE SCHOOL DEBT v

Chapter Four: Results and Analysis 55
Review of Data Collection Methods 55
Description of Participants 56
Theme One: Knowledge of Borrowing and Repayment 60
Theme Two: Seeking Advice on Financing Graduate Education 78
Theme Three: Return on Investment 86
Conclusion 95

Chapter Five: Discussion, Implications, and Recommendations 99
Introduction 99
Analysis and Implications 100
Student Understanding of Loan Debt and Borrowing Decisions 100
Seeking Advice on Financing Graduate Education 113
Return on Investment 122
Implications for Practice 128
Future Research 129
Conclusion 132

References 137

Appendices
Appendix A: Interview Protocol 150
Appendix B: Author Contributions 152

DECISION-MAKING AND GRADUATE SCHOOL DEBT vi

List of Tables
Table 1: Key definitions 14
Table 2: Overview of research participants 57
Table 3: Debt by graduate program 58
Table 4: Debt by race/ethnicity 59
Table 5: First-Generation status of participants by race/ethnicity 59
Table 6: Amount of debt by first-generation status 60
Table 7: Ways to reduce or change loans payments 73
Table 8: Number of individuals providing advice by category 79
Table 9: Contact with financial aid (FA) office and types of contact by 82
number of occurrences
Table 10: Average graduate debt by field of study 94

DECISION-MAKING AND GRADUATE SCHOOL DEBT vii

List of Figures
Figure 1: Bronfenbrenner’s Bioecological Model of Human Development 36

DECISION-MAKING AND GRADUATE SCHOOL DEBT viii

Abstract
This qualitative study summarized the findings from interviews of 116 master’s degree students
in the disciplines of business, education, and health sciences enrolled in California not-for-profit
public or private universities. The researchers gathered data to answer the following research
question: What influences students’ decisions about incurring graduate school debt?
Bronfenbrenner's Bioecological Framework for Human Development of individual decision-
making was used to analyze the findings. The following themes emerged from the data: (a)
knowledge of borrowing and repayment; (b) seeking advice on financing graduate education; and
(c) return on investment. Main findings from this study suggest that graduate students: (a) lack
an understanding of student loan borrowing and repayment options; (b) did not consult with their
university’s financial aid office and instead sought advice from trusted family members and
mentors; and (c) consistently viewed career mobility, networking, and institutional prestige as
yielding a worthy return on investment. This study identified the following implications for
policy and practice: (a) institutions of higher education should assume more responsibility for
educating students about their financial aid options; and (b) policymakers should focus more
attention on assisting master’s degree students in funding their education. Findings suggest that
future research should explore university recruitment strategies, the influence of the media on
student borrowing trends, the impact of part-time vs. full-time enrollment on educational
performance, and the decision-making process of students who chose not to attend graduate
school.

DECISION-MAKING AND GRADUATE SCHOOL DEBT 1

CHAPTER ONE

OVERVIEW OF THE STUDY

As of spring 2011, student loans outpaced credit card debt for the first time (Lewin,
2011). Concern for student loan debt has been low as there is a long held, and accurate, belief
that the amount of income realized from earning an undergraduate degree offsets the amount of
student loan debt over time (The College Board, 2012). While this may be the case for those who
are employed and have earned a bachelor’s degree, the implications are unclear for those who
continue their education and incur even more debt in graduate school. The argument suggesting
an increase in income based on the completion of a degree in higher education has merit (Baum
& Steele, 2010). Based on debt ratio, post-graduate work in lower-paying disciplines such as
education, can take much longer to pay back than those who are realizing increased income in
other disciplines, such as business and the health sciences.
An analysis of 2005 data on students and loan delinquency shows that about 11% of
students with undergraduate debt defer their loans for graduate work (Cunningham & Kienzl,
2011). An annual report on student debt by The Institute for College Access and Success
(TICAS, 2013) indicates that the average debt for a 2012 undergraduate was $29,400. More
recent data shows that enrollment in graduate education has decreased. In 2012, the national
average for graduate school enrollment had dropped by 9.8% (Allum, Bell, & Sowell, 2012).
The higher education community has limited insight into how or if financial aid impacts
student decisions to pursue graduate school. The aim of this inquiry is to understand more about
the student loan debt that graduate students incur as part of their post-baccalaureate plans. The
study is devised as a group process. A team of seven researchers begins with a core question
about graduate school financial aid and then delve deeply into this question focusing on
DECISION-MAKING AND GRADUATE SCHOOL DEBT 2
particular career fields (i.e. business, education, and health sciences). Using qualitative methods
and Bronfenbrenner’s ecological framework for human development, researchers investigate key
questions related to student debt based on the experiences of various graduate students.
Background of the Problem
As the number of federal student loan borrowers continues to grow, so has their debt.
Students are borrowing at levels that are far outpacing their ability to manage and repay their
indebtedness. The U.S. Department of Education estimated of the 3.4 million federal student
loan borrowers that entered into repayment in fiscal year 2008, 240,000 defaulted on their loan(s)
within the first two years (U.S. Department of Education, 2010a, 2010b). Cunningham and
Kienzl (2011) indicated that these figures did not provide the full extent of the “education crisis
bubble.” They highlighted the severity and dire circumstances surrounding the federal student
loan indebtedness crisis. According to Cunningham and Kienzl (2011), two out of every five
federal student loan borrowers from the 2005 cohort became delinquent without defaulting at
some time within five years of repayment. They contend that this accounts for 26% or
approximately 454,000 federal student loan borrowers that became delinquent from that cohort.
From the 2008 cohort, they indicate that 21% of federal student loan borrowers became
delinquent without defaulting while 16% defaulted.
Another issue relates to two specific populations of graduate students that have
traditionally been underrepresented in higher education. These populations include those who are
the first in their family to attend college and Latinos. For example, a graduate degree for Latino
students has become a necessary tool for upward mobility in today’s labor market (Saenz &
Pujan, 2009). However, this opportunity may be out of reach for most because of the high debt
rates incurred by graduate students to finance their education (Avery & Turner, 2012). Malcom
DECISION-MAKING AND GRADUATE SCHOOL DEBT 3
and Dowd (2012) indicate that Latino students with high undergraduate student debt were 17.1%
less likely to pursue graduate or professional school as compared with those students with no
debt. A review of the empirical data reveals that Latino students are unmistakably trailing far
behind other major racial/ethnic groups in the pursuit of graduate and professional school
degrees (Allum et al., 2012; Aud, Hussar, Kena, Bianco, Frohlich, Kemp, & Tahan, 2011). The
Condition of Education 2011 report indicates that only 6% of graduate and professional students
were of Latino origin in 2009 (Aud et al., 2011). Fry (2012) states that Latinos without advanced
degrees will most likely be locked out of the nation’s most prestigious job opportunities.
Additionally, first-generation (f-gen) college students comprise the fastest growing cohort
in higher education today (Greenwald, 2012). Roughly 33% of all college students are first-
generation (Greenwald, 2012). Extensive research has been conducted around college access and
persistence of first-generation college students at the undergraduate level (Choy 2001; Lohfink &
Paulsen 2005; Ayala & Striplen, 2002). Others have looked more closely at the financial aid
considerations of f-gen college students (Somers, Woodhouse, & Cofer, 2004; Burdman 2005;
Choy 2001; Gonzalez, Stoner, & Jovel 2003). Findings reveal that f-gen students are generally
more debt-averse than their counterparts (Burdman, 2005). In addition, this cohort is faced with
an enormous transition to college and often chooses to work full-time and study part-time
(Burdman, 2005, Choy, 2001, Lohfink & Paulsen, 2005). Further, f-gen students rely on
financial aid experts to demystify the financial aid process (Choy, 2001; Burdman, 2005).
Limited exposure to financial aid information promotes greater uncertainty and increased
apprehension about borrowing (Choy, 2001). Our study attempts to identify how graduate
students make decisions about incurring educational debt so that financial aid policymakers and
higher education institutions can support the academic endeavors of these students.
DECISION-MAKING AND GRADUATE SCHOOL DEBT 4
Purpose of the Study
The primary goal of this study is to examine and understand the decisions that students
make to incur graduate loan debt. According to Avery and Turner (2012), graduate level students
in 2009-2010 applied for and received $31 billion in federal student loans to finance their living
and educational expenses. There is very little research on the extent to which financial aid
impacts students’ decisions to seek graduate school. In addition, there is a lack of information on
the implications for those who pursue a graduate degree and incur more student loan debt. The
Institute for College Access and Success (TICAS, 2013) annual report on student debt indicates
that the average debt for a 2012 graduate is $29,400. Further, The College Board (2012) reports
that in the 2011-2012 year, 1.6 million graduate students took out an average of $26,960 in
subsidized and unsubsidized Direct Loans (i.e. Stafford Loans). This indicates an increase in
student loan debt from 2010 through 2012. Therefore, it is imperative to examine the factors that
influence students’ decisions regarding graduate school and student loan debt. The findings have
the potential to discover new information that is not available in the literature and can inform
future financial aid policies and practices. This study attempts to answer the following research
question: What influences students’ decisions about incurring graduate school debt? The next
section provides an overview of student decision-making.
The Decision-Making Process
Many diverse factors influence the decision-making process as a whole and, more
specifically, the decision to pursue a higher education degree, such as a bachelor’s or master’s
degree. Kim (2009), for example, describes five stages of decision-making: (a) problem or task
recognition; (b) information search; (c) evaluation of the alternatives; (d) purchase decision; and
(e) evaluation of the purchase decision. In addition, an individual’s background, the availability
DECISION-MAKING AND GRADUATE SCHOOL DEBT 5
of resources and tools, and the knowledge of a task or process all impact decision-making.
Further, personal attributes, relationships and friendships, and social capital can impact an
individual’s decision to attend college (Lin, 1999; Bourdieu, 1986). For example, Gonzalez,
Stoner, and Jovel (2003) found that underrepresented students do not sufficiently possess the
volume of social capital needed to navigate the college entrance process. Without the social
capital necessary to navigate the uncharted territory, these students often choose a non-college
path or make borrowing decisions that have long-term financial consequences. Finally,
socioeconomic factors, including economic status and parental education levels, may contribute
to an individual’s decision to pursue a higher education degree (Perna, 2007). The following
section provides an overview of the theoretical framework that will be used to analyze the
financial aid decision-making of graduate students.
Overview of Theoretical Framework
The factors influencing graduate student debt decision-making are explored through an
ecological framework. This framework conceptualizes student debt decisions in a non-linear,
person-context interrelated way, functioning within larger contexts. Complex spheres of
relationships are integral to overall development. Bronfenbrenner’s ecological framework for
human development, introduced as a conceptual model in the early 1970’s, formalized into a
theory in the 1980’s, and operationalized using the Process-Person-Context-Time (PPCT) model
in the late 1990’s (Bronfenbrenner & Morris, 1998), provides a theoretical framework to
substantiate an understanding of student debt, and the determinants and barriers to graduate
education. The framework also provides a model to transform qualitative research data into
meaningful information to shape program and policy improvement. Renn (2008) used a human
ecological approach to understand multiracial identity, and proposed that the effects of higher
DECISION-MAKING AND GRADUATE SCHOOL DEBT 6
education peer culture could be explained using Bronfenbrenner’s ecological model, placing
students at the center (microsystem). Renn suggested that the strength of using the
Bronfenbrenner model in higher education research is its ability to analyze processes as well as
outcomes of peer culture. Using the ecological framework, Chenoweth and Galliher (2004)
examined direct and indirect factors that influence rural West Virginia high school students’
college attendance decisions. The authors found that individual characteristics (i.e. family, peer,
and school contexts) and broader cultural influences were all implicated in predicting rural
Appalachian students’ academic aspirations.
Bronfenbrenner’s model draws from natural ecosystems or a network of interactions
among organisms and their environments, to understand human development (1998). He posits
that human development is affected by the interaction of interdependent environmental systems:
microsystem, mesosystem, exosystem, macrosystem, and chronosystem. The microsystem is the
immediate environment where the individual has direct interaction with family members and
peers. The mesosystem is comprised of the relationships and connections between the immediate
environments within two or more microsystems (e.g. family, school, and work). The exosystem
is inclusive of the social settings in which the individual’s development is indirectly being
affected, including economics, politics, and culture. At the macrosystem level, the individual is
influenced by cultural values, society norms and expectations, and cultural beliefs and values.
The chronosystem is a time-based dimension of the model that influences all levels of the
ecological system. Bronfenbrenner advocated that research investigating human development
should include a field-theoretical approach whereby the interactions among layers of PPCT
affecting individual outcomes can be evaluated (Bronfenbrenner, 2005; Johnson, 2008). The
interaction of complex processes, operating at different scales and timeframes, create an
DECISION-MAKING AND GRADUATE SCHOOL DEBT 7
individual’s ecology that is continually interactive, rather than a flat model focused on additive
effects of peer, family, and environment (Bronfenbrenner, 1998). The following section presents
an overview of the methodology that will be implemented to carry out the proposed qualitative
research study.
Overview of the Methodology
In an attempt to understand how graduate students make decisions about incurring
graduate debt, a qualitative research approach will be implemented. Also known as qualitative
inquiry, a qualitative approach gives researchers the opportunity to explore human phenomena,
social and cultural contexts, and the ways in which people understand their world (Merriam,
2009). The ultimate purpose of qualitative research is to gain depth of understanding, process,
and meaning surrounding the human experience and to communicate the findings to others who
are interested in that particular setting (Patton, 1985). In this study, researchers will interview
current graduate students from a variety of backgrounds pursing a master’s degree in education,
health sciences, or business. The specific methods for conducting this study are described below.
Purposeful Sampling
Purposeful sampling will be employed in order to gain the greatest insight from
“information-rich” cases surrounding what influences students’ decisions about incurring
graduate school debt (Patton, 2002). The following selection criterion has been established to
identify respondents for this study: (a) current attendance at an accredited public or private non-
profit college or university in California; and (b) enrollment in a master’s degree program in one
of three fields (business, education, or health sciences). Each researcher will interview 17-20
graduate students who meet the selection criteria. The following methods will be used to identify
respondents.
DECISION-MAKING AND GRADUATE SCHOOL DEBT 8
Snowball sampling.
Also known as chain or network sampling, the snowball strategy is one of the most
commonly used forms of purposeful sampling (Merriam, 2009). Snowball sampling involves
selecting key participants who meet the selection criteria. After interviewing the respondents, the
researchers will ask each one to refer additional participants who meet the selection criteria. This
method will be utilized until the number of desired respondents is achieved.
Individual Interviews
Using a semi-structured interview approach (Merriam 2009), researchers will conduct a
one-on-one interview with each respondent. Researchers developed an interview protocol
consisting of 23 open-ended questions. While the questions have been predetermined, some
flexibility can be applied as follow-up questioning of particular responses may be necessary. All
interviews will be recorded using an audio recording device. Once all of the data has been
collected, it will then be transcribed and coded to identify themes. The themes will then be
consolidated and analyzed to produce general conclusions as they relate to the significance of
this topic.
Significance of the Study
The nation’s student indebtedness has continued to rise at an unprecedented rate in the
past two decades. According to Fry (2012), one out of five, or 19% of the nation’s households,
owed federal student loan debt in 2010. Of these households, 70% were headed by individuals
younger than 45. These same households have also been characterized as being well-educated,
with 70% of them finishing college. Another defining characteristic of this cohort is that the
middle and upper-middle class disproportionately hold the majority of the nation’s federal
student loan debt (Doyle, 2013).
DECISION-MAKING AND GRADUATE SCHOOL DEBT 9
Cunningham and Kienzl (2011) contend that the resulting debt levels have become
unmanageable and will have a long-term impact on other life choices and consumption patterns
of households with federal student loan debt. This study will provide a snapshot into the
decision-making process of graduate students to incur debt to finance their educational goals.
Further, it has the potential to inform policy and practice in financial aid and higher education.
The following section is dedicated to defining some of the important terms often associated with
the financial aid process and ends with a comparison of federal loan programs as shown in Table
1.
Key Definitions
Cost of Attendance (COA): The cost of attendance or “budget” is determined by the college or
university that the student is attending. This figure must be derived based on reasonable costs to
attend the student’s program of study (subject to federal guidelines). The COA usually includes
tuition, fees, books, housing, travel, childcare and other expenses that can be directly related to
the cost of attending school. Non-school-related costs cannot be included in the COA. This value
typically sets the maximum amount that a student can borrow in student loans (federal or
private).
Direct Consolidation Loan (Consolidation loan): This is a federal program that allows students
to combine multiple federal student loans into one loan. This is typically done after a student
leaves school. The benefits are that the student has one loan payment to make each month and
their monthly payments may go down because the payment period for the loan is 30 years.
However because of the extended payment period, the student may end up paying more in
interest than they would with a shorter payment period. If the loans being combined have special
borrower benefits (such as interest rate discounts or early cancellation terms), those will be lost
DECISION-MAKING AND GRADUATE SCHOOL DEBT 10
when the loan is consolidated.
Direct PLUS Loan (PLUS): This loan program was initially created for parents of
undergraduate student to borrow for their child while they were in school. The original name of
the program was the Parent Loan for Undergraduate Students (PLUS). In 2006, congress created
the GRAD PLUS loan program, which allowed graduate students to borrow a loan that is similar
to the original PLUS loan. Both of these loans are now referred to as “Direct PLUS Loans.”
Graduate students do not need to demonstrate financial need to borrow a PLUS loan, however,
they do have to pass a credit check and the interest rates are higher than those of the Direct
Unsubsidized Loan program. Like the Direct Unsubsidized Loan, the PLUS loan accrues interest
while the student is in school. The maximum amount that a student can borrow in this loan
program is capped by their Cost of Attendance. No payments are required on this loan until after
the student leaves school (however interest does accrue as noted above). This loan has a ten-year
repayment period (although that can be extended under certain repayment programs).
Direct Subsidized Loan (Subsidized loan): These are a type of Direct loan that is made to
students who demonstrate financial need. Under this program, interest accrued on the loan while
the student is in school is paid by the federal government. Since July 1st, 2012 these loans have
only been available to undergraduate students. Graduate students who borrowed after July 1st,
2012 are no longer eligible for this loan program.
Direct Unsubsidized Loan (Unsubsidized loan): These are a type of Direct loan that is made to
any eligible student, financial need is not required to be eligible for this loan. Interest accrues on
this loan while the student is in school and that interest is then added to the principle that the
student borrowed when they leave school and are required to repay the loan. After the student
leaves school, they are charged interest on both the principle and the interest that accrued while
DECISION-MAKING AND GRADUATE SCHOOL DEBT 11
they were in school. Graduate students are eligible to borrow up to $20,500 in this loan program
each year. No payments are required on this loan until after the student leaves school (however
interest does accrue as noted above). This loan has a ten-year repayment period (although that
can be extended under certain repayment programs).
Expected Family Contribution (EFC): This figure is calculated using a formula set by the
federal government. The EFC is based on the student’s income and some assets as reported by
the student on their FAFSA. The EFC is the amount that the student is expected to contribute to
their education.
Federal Perkins Loan (Perkins Loan): This is a federal student loan program that is only
available to students with demonstrated financial need. Funds for this program are distributed to
the awarding colleges or universities who then determine which students at their institution are
eligible for the loan (within certain federal guidelines). The amount awarded to each student is
dependent upon what the institution has available, but can never exceed more than $8,000 per
year per student. Perkins loans have a 5% interest rate, they are subsidized (no interest is accrued
while the student is in school) and the school is considered the lender so payments are made to
the school directly after the student graduates (or drops below half time enrollment). This loan
has a ten-year repayment period and they are subject the cancellation for teachers who serve in
certain school districts or teach certain subjects.
Federal Student Loans: Student loans funded by the federal government. There are two types of
federal student loans: the William D. Ford Federal Direct Loan (Direct loan) and Federal Perkins
Loans (Perkins loan). Federal student loans do not have to be repaid until the student leaves
school (graduates or drops to less than half-time enrollment). The interest rate is fixed each year.
Interest paid on federal student loans may be tax deductible. There are many repayment plans
DECISION-MAKING AND GRADUATE SCHOOL DEBT 12
including an option to tie the monthly payment to the student’s income and students can request
temporary postponements on their payments if they suffer economic hardship or return to school.
Federal student loans also have loan forgiveness programs depending on the student’s
occupation.
Federal Work-Study (FWS): The work-study program provides funds for a student to earn in
part-time employment while they are in school. Work-study employment is typically on-campus
with some exceptions. Funds for this program are distributed to the awarding colleges or
universities who then determine which students at their institution are eligible (within certain
federal guidelines). Students are awarded an amount of work-study which they then earn by
working and receiving a regular paycheck. Once they have earned all of the funds awarded to
them, the work-study is exhausted. This is considered a need-based aid program, so students
must demonstrate high need to be eligible for the award.
Free Application for Federal Student Aid (FAFSA): All students must complete this
application to receive federal aid. Students submit demographic information, information about
their enrollment plans for the year and information on their income and assets from their
proceeding year’s federal income tax returns. The Department of Education uses this information
to calculate the student’s EFC and their eligibility for federal aid. This information is then passed
to the college or university which is then responsible for calculating what aid programs the
student qualifies for and notifying the student of their available funding for the year.
Need: A student’s “need” is a set value derived by a formula: the Cost of Attendance (COA)
minus the Expected Family Contribution (EFC) equals the student’s calculated “need”. If this
figure is high (i.e. close to the cost of attendance because the EFC is zero or very low), then the
student is considered to be “high-need”. If this figure is low (because the student’s EFC is higher
DECISION-MAKING AND GRADUATE SCHOOL DEBT 13
than their COA) then the student is considered to be “low-need”.
Need-based aid: This is any form of aid that is awarded to students based on their need. For
graduate students, need-based aid programs are typically only the Perkins Loan or Federal Work-
Study. Students with a high need can expect to receive need-based aid. Students with a low need
will not qualify for need-based aid.
Private Student Loans: Student loans made by a lender such as a bank, credit union, state
agency, school or private organization. Many private student loans require payments while the
student is in school. Private student loans can have variable interest rates and often have
significantly higher interest rates than federal student loans. Private student loans are not
subsidized; interest accrues while the student is in school. Most private student loans require an
established credit record on the part of the student or a credit-worthy co-borrower. Often the
interest rate of the loan is tied to the borrower’s credit-worthiness. The maximum amount that a
student can borrow in this loan program is capped by their Cost of Attendance. Interest on
private student loans may not be tax deductible and there may not be income-based repayment
plans or the option to request a postponement in payment due to economic hardship or returning
to school.
Student Loans: Loans offered to students to pay for educational costs. Student loans are funds
that are borrowed and must be paid back with interest. Student loans can come from two sources:
the federal government (see Federal Student Loans) and private student loans (see Private
Student Loans).
William D. Ford Federal Direct Loan (Direct loan): This is a type of federal student loan. The
U.S. Department of Education is the lender. There are four types of Direct loan: The Direct
Subsidized Loan (Subsidized loan), The Direct Unsubsidized Loan (Unsubsidized loan), the
DECISION-MAKING AND GRADUATE SCHOOL DEBT 14
Direct PLUS Loan (PLUS), and the Direct Consolidation Loan (Consolidation loan).
Table 1
Key Definitions
Loan Program Borrower Maximum
Amount
Must
Demonstrate
Financial
Need? (Y/N)
Credit
Check
?
(Y/N)
Repayment
Starts
Repayment
length
Subsidized?
(Y/N)
Direct
Consolidation
Loan
Graduate or
undergraduate
student
None (can only
consolidate
federal loans)
N N n/a 30 years N
Direct PLUS
Loan
Graduate
student or
parent of
undergraduate
student
Cost of
attendance
N Y After
graduation
or leaving
school.
10 N
Direct
Subsidized
Loan
Undergraduate
student
$5,500/year Y N After
graduation
or leaving
school.
10 Y
Direct
Unsubsidized
Loan
Graduate or
undergraduate
student
$2,000/year for
undergraduate-
s, $12,000 per
year for
graduate
students
N N After
graduation
or leaving
school.
10 N
Federal
Perkins Loan
Graduate or
undergraduate
student
$5,500/year for
undergraduate-
s, $8,000/year
for graduate
students
Y N After
graduation
or leaving
school.
10 Y
Private
Student Loan
Graduate or
undergraduate
student
Cost of
attendance
N Y Varies but
usually after
student
graduates.
varies N
Note. All definitions from the Federal Student Aid website at: studentaid.ed.gov.

This chapter lays the foundation for our study, which seeks to answer the following
research question: What influences students’ decisions about incurring graduate school debt?
The following chapter will present relevant research available on decision-making and student
DECISION-MAKING AND GRADUATE SCHOOL DEBT 15
loan debt.
A Note on Author Contributions
This dissertation was written as a collaborative process between all seven authors. Each
author contributed original writing for multiple sections in each chapter. Each author’s work was
edited and re-written by the other authors as part of a collaborative editing process. See
Appendix B for specific section contributions.

DECISION-MAKING AND GRADUATE SCHOOL DEBT 16

CHAPTER TWO
LITERATURE REVIEW
The Institute for College Access and Success (TICAS, 2013) annual report on student
debt indicates that the average debt for a 2012 graduate is $29,400. According to Fry (2012), one
out of five households owed student loan debt in 2010, and of these five households, 70% were
headed by individuals younger than 45 years of age. A study conducted by the Institute of Higher
Education Policy, revealed that more than two out of every five borrowers from the 2005
repayment cohort became delinquent in some form or other during their repayment period
(Cunningham & Kienzl, 2011). Recently, students’ loan debt and their ability to manage it has
become the focus of the mainstream media. Cunningham and Kienzl (2011) echoed the
mainstream media’s concern that resulting debt levels have become unmanageable and will have
long-term impact on other life choices and consumption patterns of households with federal
student loan debt.
A significantly high proportion of empirical and anecdotal research reveals undergraduate
borrowing patterns. However, less is known about the borrowing habits of graduate level
students. A study conducted by Avery and Turner (2012), advanced the notion that graduate
level students received $31 billion in federal student loans to finance there living and educational
expenses. The impact of student loans is complicated, and there are contradictory perceptions
about the ultimate benefit of loans to complete one’s educational goals. Several researchers have
noted that students often misunderstand their financial aid packages and consistently
miscalculate their own future earnings (Long 2004; Burdman 2005; Somers, Woodhouse, and
Cofer 2004; King 2002; Warwick and Mansfield 2000). Little is also known about what factors
may be associated with the decision to incur student debt for graduate studies. This is because
DECISION-MAKING AND GRADUATE SCHOOL DEBT 17
few studies have specifically examined and separated undergraduate debt from graduate-level
debt.
It is imperative to examine the factors that influence a student’s decision to incur
graduate school debt. The Council for Graduate Schools stated that graduate school enrollment
dropped by 9.8% in 2012 (Allum et al., 2012). Avery and Turner (2012) then raised the question
of whether or not human capital in the form of education was worth the investment. In this
chapter, we will review the literature associated with graduate student debt. We will be
concentrating our efforts on three areas: (a) perceptions about debt; (b) perceptions about the
value of a degree; and (c) understanding of how financial aid decisions are made. The literature
review will result in a better understanding of how graduate students make decisions about
incurring student loan debt to fund their studies.
Student Perceptions about Debt
Students’ perceptions about debt shape how they borrow to fund higher education. The
literature on student loan borrowing breaks these student perceptions about debt into two broad
categories. The first category, and the one that has received the most attention in the popular
press, is the view that students borrow too much to fund their education (Avery & Turner, 2012;
Baum & Steele, 2010; Dwyer, Hodson, & McCloud, 2012; Kim & Eyremann, 2006; Lewin,
2011; Malcom & Dowd, 2012; Millett, 2003). Looking at student perceptions through this lens,
students are seen as taking on more loan debt than they will be able to comfortably repay when
they go into repayment. This excess student loan debt is seen as a barrier to the student’s
personal, professional, and educational advancement in life after college and as a possible barrier
to transitioning to graduate school.
The second category of perceptions is that students can be debt-averse which causes them
DECISION-MAKING AND GRADUATE SCHOOL DEBT 18
to undermine potential opportunities for educational advancement by being unwilling to borrow
student loans (Avery & Turner, 2012; Burdman, 2005). From this perspective, students who are
reluctant to borrow loans to pay for their education limit their educational opportunities either by
not attending a college or university for which they are academically qualified or by not
attending college at all. A related area of student perceptions about debt involves the idea that
students do not have enough information to make successful decisions about student loan debt
(O’Connor, Hammack & Scott, 2010; Tierney & Venegas, 2009). This relates to the second main
category in that it is the student’s lack of knowledge that is causing them to be averse to
borrowing, which prevents them from taking advantage of opportunities for advancement.
Student Debt as a Burden
In her New York Times article, Lewin (2011) describes student loan debt as the “anti-
dowry,” something that an individual brings to their post-college life that is a limiting factor on
their future life opportunities. This sentiment echoes that of many in the popular press who have
described the rapid increase in student loan debt in the past decade as a “student loan bubble”
and predict that it will have dire consequences for the economy and for American society (Avery
& Turner, 2012). In Lewin’s view, students have been forced to take on too much student loan
debt and it is causing them to postpone marriage, home ownership, and even having children.
Lewin (2011) goes on to quote President Obama as saying that he too graduated from college
under a “mountain of loan debt.” Viewpoints such as these have entered the popular
consciousness and play a profound negative role in how student perceptions of loan debt are
shaped (Avery & Turner, 2012).
Avery and Turner (2012) created a framework for examining student loans and
determining if a student is borrowing too much or too little. Using rational choice theory, they
DECISION-MAKING AND GRADUATE SCHOOL DEBT 19
looked at student borrowing decisions as based on a comparison of the benefits of a college
education versus the costs of attending college (both directly through tuition and indirectly
through lost wages) (Avery & Turner, 2012). They found that the value of a college education
has increased over time, however for individuals who drop out of school, select majors that do
not lead to higher income jobs or enroll in programs that lead to degrees with lower earning
potential (e.g. vocational school programs), the value of a college degree can be less than it
would be otherwise (Avery & Turner, 2012). This makes it difficult for students to make rational
decisions and may lead to over-borrowing when students borrow to enroll in programs that have
lower future earning potential.
In their policy brief for The College Board Advocacy and Policy Center, Baum and
Steele (2010) examined the characteristics of undergraduate students who have unusually high
student loan debt levels. They found that students often had limited understanding of the impact
of their loan obligations and often borrowed too much, particularly when attending for-profit
institutions. Baum and Steele (2010) found that overall debt levels are higher for students with
four-year degrees, but that high-debt was not necessarily an indicator of repayment issues
because those students also have a higher earning potential. They theorized that while the overall
debt is lowest for students in associate degree or certificate programs, those students are also
more likely to have lower earnings than a student with a four-year degree, so they may have as
much difficulty repaying their more modest loan debt as a student with a higher debt level but a
degree that may lead to a higher-paying career (Baum & Steele, 2010). For both students in four-
year and two-year degree programs, Baum and Steele (2010) found that failure to complete a
degree was the most consistent predictor of loan default.
Dwyer et al. (2012) examined patterns of student loan debt by gender. They analyzed
DECISION-MAKING AND GRADUATE SCHOOL DEBT 20
data from the 1997 cohort of the National Longitudinal Study of Youth and found significant
differences between the outcomes of borrowing for male and female college students. Women
had a tendency to remain in school after borrowing while men were more likely to drop out of
school after incurring large amounts of debt (Dwyer et al., 2012). For both populations they felt
that students entered college with little understanding of loan debt and what it means. However,
over the course of their college careers, concern over their loan debt grew for both male and
female college students (Dwyer et al., 2012). The researchers found that the larger a student’s
loan burden during college, the higher the pressure on that student to drop out of school
prematurely. Much of the literature on student loan debt describes prematurely dropping out of
college as the worst possible outcome; students incur loan debt without gaining the degree or
certification that would provide them with increased earning potential to pay for their student
loans (Avery & Turner, 2012; Baum & Steele, 2010; Cunningham & Kienzl, 2011; Hillman,
2014).
Effects of Undergraduate Debt on Graduate Enrollment
Millett (2003) studied the effect of undergraduate debt on a student’s likelihood of
enrolling in graduate or professional school. She studied 1,982 students who completed the
Baccalaureate and Beyond (B&B) Longitudinal Study of 1992-1993 college graduates (Millett,
2003). These students were recent bachelor’s degree recipients who responded on the survey that
they expected to earn a doctoral degree, and Millett (2003) specifically examined their likelihood
of enrolling in a graduate or first professional degree program within one year of earning their
bachelor’s degree. She found that undergraduate indebtedness acted as a deterrent against
applying to graduate or professional school among 41% of doctoral degree aspirants in 1992-
1993 (Millett, 2003). Millett (2003) also found that socioeconomic status had an impact because
DECISION-MAKING AND GRADUATE SCHOOL DEBT 21
students with lower family income were more likely to have higher undergraduate loan debt and,
thus, were less likely to advance on to graduate school than their higher socioeconomic level
peers.
Kim and Eyermann (2006) also examined the effect of undergraduate debt on plans to
attend graduate school. They used the longitudinal data collected by the Cooperative Institutional
Research Program (CIRP) of the Higher Education Research Institute (HERI) at the University
of California, Los Angeles (UCLA) (Kim & Eyermann, 2006). They compared the CIRP survey
data that was collected from freshmen in 1985 and again in 1989 against data collected from
freshmen in 1994 and again in 1998 (Kim & Eyermann, 2006). They bracketed this data
collection around the changes in federal financial aid policy that resulted from the amendment of
the Higher Education Amendments of 1992, which created the federal Unsubsidized Stafford and
Direct Loan programs (Kim & Eyermann, 2006). The creation of this loan program made it
easier for undergraduates to acquire federal student loans, especially for middle and upper
income students (Kim & Eyermann, 2006). They found that for students in the 1985 and 1989
cohorts, borrowing had no impact on their plans to attend graduate school (Kim & Eyermann,
2006). While Kim and Eyermann (2006) had anticipated that there would be an impact on plans
to attend graduate school for the population of students surveyed in 1994 and 1998, there
appeared to be no significant effect from loans on the students from low and high-income
families. They did find that there was a small, but statistically significant positive effect
associated with loan borrowing for students from middle-income families (Kim & Eyermann,
2006). They acknowledged that while their model assumes that all other predictors of plans to
attend graduate school are the same, this is not actually the case; in particular, they point out that
underrepresented minority and lower socioeconomic level students tend to have lower degree
DECISION-MAKING AND GRADUATE SCHOOL DEBT 22
aspirations (Kim & Eyermann, 2006). Kim and Eyermann (2006) do not directly address the
impact of this on their finding that previous loan borrowing had no significant impact on students
from lower-income families. They did suggest, however, that cultural and social capital along
with academic achievement may be more important than previous loan debt in predicting
graduate school attendance for different racial or ethnic groups.
Malcom and Dowd (2012) examined the effect of student borrowing to earn a bachelor’s
degree in a science, technology, engineering, or mathematics (STEM) field on a student’s
likelihood to go to graduate school. They disaggregated their data by race and ethnicity and
found that African-American and white students were more likely to incur undergraduate student
loan debt and that Asian-American students were less likely to incur debt (Malcom & Dowd,
2012). They found that regardless of race or ethnicity, undergraduate loan served as a barrier for
students enrolling in graduate programs (Malcom & Dowd, 2012). Malcom and Dowd (2012)
concluded that more needs to be done to address inequities in the existing financial aid system
that forces students, particularly minority students, to take on excessive loan burdens. They also
noted that being debt-averse is common for some minority students and that this debt-aversion
leads to those students missing out on educational opportunities that could benefit them, like
attending graduate school (Malcom & Dowd, 2012).
Student Aversion to Debt as a Barrier to Education
This leads to the second theme on student perceptions about debt from the literature:
Student aversion to debt as a barrier that prevents students from taking advantage of their full
educational potential. Avery and Turner (2012) noted that one of the risks of focusing on high
levels of student debt in the media is that it could cause students to be reluctant to borrow for
their education. They pointed out that one in six undergraduates at four-year institutions do not
DECISION-MAKING AND GRADUATE SCHOOL DEBT 23
take advantage of the student loans that they are eligible to receive (Avery & Turner, 2012). This
could be due to the complexities of the application process, or because students are opting out of
borrowing loans that they do not want to borrow or do not feel they need (Avery & Turner,
2012). At the same time, Avery and Turner (2012) suggest that not borrowing could cause
problems for students as they assume high amounts of credit card debt or work more than 20
hours per week in lieu of borrowing. Failing to take advantage of their student loan eligibility
could have a negative impact on their academic performance (Avery & Turner, 2012). Fox’s
(1992) work on graduate school debt, which was published more than two decades before media
frenzy about debt, showed that students were more likely to consider taking on graduate debt.
His work also found that decisions to take on debt were more closely connected to academic
discipline. He suggested that more intense work around discipline specific choices would help to
illuminate the picture of graduate student debt and how decisions on this issue are made.
Burdman (2005) specifically examined the impact of debt aversion on college-going
behavior and found that students’ aversion to debt limits their chances of attending, and
ultimately, completing college. She found that many students share the same perception about
debt expressed in Lewin’s article (2011). Namely, she found that student loan debt should be
viewed as an impediment to students’ future plans such as purchasing a car, a home, or being
able to take on the expense of marriage and children (Burdman, 2005). Burdman (2005) felt that
it would be difficult for a young adults to perceive the long-term cost of not going to college
when confronted by the potential expense of student loans, and because of this, students who are
debt-averse may avoid higher education altogether. She also found that students who are debt-
averse also work longer hours while in school, are more likely to attend college part-time and to
attend a two-year rather than a four-year institution, which are all behaviors that Burdman (2005)
DECISION-MAKING AND GRADUATE SCHOOL DEBT 24
associates with decreased potential for academic success. Burdman (2005) felt that the increasing
prominence of student loans in federal student aid funding may have the unintended consequence
of narrowing the options of debt-averse students and may decrease their chances of going to
college. These student perceptions of loans as being risky can interfere with the goal of the
federal student loan programs: To equalize access and opportunity for all students (Burdman,
2005).
Burdman’s (2005) concern is especially important when considering access for minority
students to higher education. Students from minority populations typically lack the informational
resources of non-minority students. O’Connor, Hammack, and Scott (2009) found that Latino
students who are qualified to attend four-year institutions are more likely to enroll in community
colleges than similarly academically prepared white or African-American students (O’Connor et
al., 2009). Latino students often experience difficulty accessing social networks that provide
detailed and accurate information about student financial aid, which may result in the
overrepresentation of four-year eligible Latino students at lower-priced community colleges
(O’Connor et al., 2009).
Tierney and Venegas (2009) also examined low-income students’ access to information
about financial aid and college enrollment decisions. They found that low-income students were
less likely to attend college because they believed higher education was expensive and
unaffordable (Tierney & Venegas, 2009). Those students who did attend college, often missed
out on financial aid opportunities because they did not apply, even though they were qualified to
do so (Tierney & Venegas, 2009). Both O’Connor et al. (2009) and Tierney and Venegas (2009)
point to a lack of access to information about financial aid as a barrier to minority and low-
income student college enrollment. This work could signal that while some students may decide
DECISION-MAKING AND GRADUATE SCHOOL DEBT 25
against going to college based on a lack of information about managing the possible costs of
college, they may also opt not to go because they choose not to incur any related debt.
The literature explores two contradictory viewpoints on student perceptions about loan
debt. Much of the research echoes the opinion found in the popular media: That students are
taking on too much debt for college, which creates a burden that can impact them for the rest of
their lives and reduces their future options. The contrary opinion in the literature is that students
are too debt-averse, limiting their use of available financial aid. From this viewpoint, minority
students and students from low-income families are less likely to go to college, or to engage in
successful academic behaviors once they are in college, because they lack the social capital to
make use of the loan funds that are available to them.
Perceptions About the Value of a Degree
As Millett (2003) has argued, individuals who already hold high levels of debt from their
undergraduate work may be less likely to take on additional debt for graduate school. However,
while debt burden has more than doubled from $10,000 to more than $25,000 over the last ten
years, there has been a steady flow of students enrolling in graduate degree programs. In this
section of our literature review, we examine what research tells us about how students assess the
value of a graduate degree from three perspectives: (a) return on investment; (b) degree value
based on discipline; and (c) other population-specific impacts.
Return on Investment
There is economic evidence to suggest that a graduate degree holds value. Research by
the U.S. Bureau of Labor Statistics (2013) suggests that individuals with graduate degrees have
higher wages and lower unemployment. In the current economic landscape, a graduate degree is
seen as a possible next step by undergraduates who are faced with low job prospects or
DECISION-MAKING AND GRADUATE SCHOOL DEBT 26
underemployment. Hwang, Liao, and Huang (2013) found that undergraduates were making the
decision to continue on to graduate school based on the perception that they would not be able to
make a living wage with only a bachelor’s degree. The researchers also found that individuals
with graduate degrees may face limited prospects in a fluctuating economy often finding
themselves competing for positions that only require a bachelor’s degree.
Degree Value Based on Discipline
The literature on debt and graduate studies that does exist is generally positive and
largely discipline-specific. Baruch and Leeming’s (2001) early study of MBA graduates found
that individuals who were employed as working managers did experience direct effects from
their educational experience. Respondents highlighted increased self-confidence and greater
breadth of managerial tools as main effects of participating in an MBA program. They
emphasized that these internal perceptions and increased skills would not have been acquired
outside of a guided educational experience. More recent research continues to suggest that MBA
graduates and others who earn specialized business degrees, continue to experience high levels
of tangible and intangible value from their graduate degree experience (Baruch, Bell, & Gray,
2005).
Population-Specific Impacts
There has also been work related to the graduate-level choice processes (Battle &
Wigfield, 2003; Heller, 1997; Dejardins, 2005). Battle and Wigfield’s (2003) work on women
and post-undergraduate career paths found that college women were likely to consider a graduate
education as a viable and immediate path in comparison to beginning a family. This study, which
relies on expectancy value theory, was focused on understanding more about the perceived
binary between a career value and a family value. While this work may apply to the present
DECISION-MAKING AND GRADUATE SCHOOL DEBT 27
study, the continuing trend of returning adults to undergraduate and graduate degrees may
complicate this proposition. In other words, many students who are seeking graduate degrees in
the current economic context are older than they were a decade ago and are more likely to have
families (Applegate, 2011).
Financial Aid Decision-Making
Various theories have been applied to understand student financial aid decision-making.
The following section examines a sample of theories to determine whether they are applicable in
answering the proposed research question.
Rational Choice Theory
Researchers have examined students’ financial choices relating to college from both a
rational choice framework and a sociological framework. The rational choice framework stems
from economic models of human investment, and assumes that individuals invest in their
education after weighing the perceived benefits with the expected costs (Schultz, 1961; Becker,
1993; Cohn and Geske, 1990; Cohen and Huches, 1994). Policymakers and social science
researchers often operate from this framework, assuming that financial aid decision-making is a
logical process of consumer reactions to market demands. The rational choice framework is
limited, however, in that it views decision-making as linear, does not help to explain differences
in college choices across groups, and upholds existing structures and social orders. Students in
Heller’s study of price response did not all react the same way to various forms of financial
assistance and tuition changes “even when the economic value of each was the same” (1997, p.
632). DesJardins and Toutkoushian (2005) note that decision-making often involves internal
thought processes that cannot be observed, which involve individual beliefs, preferences, and
inclination towards risk-taking. As such, it becomes difficult to understand student decision-
DECISION-MAKING AND GRADUATE SCHOOL DEBT 28
making simply from a rational choice perspective.
Sociological Models
Sociological models of students’ college choices take into account the ways in which
individuals’ contexts shape their perspectives. Students’ perceptions of the economic costs and
benefits of higher education vary based on differences in access to information and external
contexts (Paulsen, 2001). Sociological approaches emphasize the cultural and social capital of
individuals navigating through higher education structures, and structural barriers faced by
people of different ethnic and gender groups. Although sociological approaches are useful in
understanding how individuals gain information, they do not explain how individuals arrive at
decisions based on this information (Manski, 1993).
Developmental and Change Theories
Other research on college students has been predominantly grounded in developmental
theory and change theory (St. John, 2003). Although student development theory has been useful
in understanding traditional students, it does not account for the backgrounds and experiences of
students of color and older students. Student development theory is also limited in its
applicability to public policy, as it focuses on the academic, personal, and moral development of
students (Paulsen & St. John, 2002). Change theory, which focuses on how college experiences
influence students, has provided insight on the influence of inputs, such as financial aid on
persistence. Although it has been adapted to study the experiences of students from diverse
backgrounds, change theory is rooted in the experiences of traditional, middle-class students.
Student Choice Theory
Student choice theory “examines the experiences of diverse groups of students on their
own terms” (Paulsen & St. John, 2002, p. 191), and looks at student choices as a basis for policy
DECISION-MAKING AND GRADUATE SCHOOL DEBT 29
formation. Paulsen and St. John (2002) utilized student choice theory to develop a financial
nexus model, which allows for understanding how student choice and persistence of diverse
student populations are related, in an effort to inform public policy that supports diversity in
higher education (Paulsen & St. John, 2002). Paulsen and St. John (2002) overtly reject the
assumption made in other research that students make their student loan decisions under similar
circumstances and in similar contexts. They argue from a critical theory perspective that rational
choice theory cannot provide an equitable method for examining student decision-making
because it ignores the student’s context (Paulsen & St. John, 2002). Paulsen and St. John (2002)
found that socioeconomic status (SES) had a strong relationship to the choices that
undergraduate students made about college attendance and to their persistence in college. They
found that poor and working class students struggled in the current high-tuition, high-loan higher
educational environment. These students are aware of college costs, and make decisions about
college attendance based on that knowledge, and yet they are the least likely to persist in college
(Paulsen & St. John, 2002). While their research was of undergraduate students, it is likely that
these same considerations come into play when graduate students make decisions about college
affordability and persistence.
Balanced Access Model and Perna’s Conceptual Model of Student Decision-Making
St. John (2003) and Perna (2007) have proposed two models that frame students’ college
choices within broader contexts. St. John’s balanced access model (2003; 2005) helps to explain
the multiple inputs that affect students’ decision-making: family income, academic preparation,
and students’ expectations. Perna (2007) proposes a conceptual model of student decision-
making that draws on both economic and sociological perspectives, in order to help explain the
variation of educational attainment across racial and socioeconomic groups. Perna’s model
DECISION-MAKING AND GRADUATE SCHOOL DEBT 30
assumes that individuals’ decisions are shaped by four contexts: (a) the individual; (b) the school
and community; (c) the higher education context; and (d) social, economic, and political factors.
Although both of these models provide a broader framework for understanding student decision-
making, the dominant conversation about student aid remains grounded in rational choice theory.
These models have not changed the way researchers and policymakers view structures, and the
existing structures have not changed.
Social Ecological Model of Decision-Making
Tierney and Venegas (2009) draw from Bronfenbrenner’s (2005) work to propose a
social ecological model of decision-making. They emphasize the importance of situating an
individual within a social context, putting forth a model that examines decision-making within
the context of educational, familial, community, and out of class environments (Tierney &
Venegas, 2009). The social ecological model builds on St. John (2003) and Perna (2007), and
presents an alternative perspective of the relationships between students and structures. Whereas
previous models present students as subjects within static, rigid structures, the social ecological
model proposes a view of individuals as agents, and structures as flexible. The social ecological
model moves the conversation beyond the effect of inputs on student decision-making, and
towards the need for structures to recognize these inputs and adapt to meet student needs.
Student Decision-Making

The financial aid process has become more complex, and the rules and regulations
associated with the programs have become more elaborate. This has led to challenges and
barriers in student financial aid decision-making. This complexity has the potential to impact
student college enrollment and successful completion (Baum & Schwartz, 2013). This decision-
DECISION-MAKING AND GRADUATE SCHOOL DEBT 31
making process is explored in the literature that defines influences on college access decision-
making using theoretical frameworks and social influence constructs.
Stages of Decision-Making
The information-seeking behavior of an individual is one stage in the decision-making
process. This step or stage is critical in helping a student to reach a decision or complete a task.
Kim (2009) defines the stages of decision-making as follows: (a) problem or task recognition; (b)
information search; (c) evaluation of the alternatives; (d) making a decision; and (e) evaluation
of the decision. An individual’s background, knowledge about the task, availability of time and
resources, will affect an individual’s behavior and approach (Kim, 2009).
Decision-Making Frameworks
Explaining student debt decision-making using behavioral, sociological, psychological,
and economic theoretical frameworks have all been proposed and help to explain student debt
decision behavior (Chudry, Foxall, Pallister, 2011; Battle & Wigfield, 2003; St. John, 2003;
Paulsen, 2001). Perna (2007) proposed drawing on economic and socioeconomic perspectives,
suggesting the process an individual undergoes when making a decision to attend graduate
school is influenced by four contexts: (a) the student’s own internal knowledge; (b) experience
and motivation; (c) the school, community and higher education; and (d) social, economic and
political factors. Using sociological and economic perspectives, Chudry, Foxall and Pallister
(2012) propose grouping students into debtor types. Their work was grounded in a cognitive
behavioral model, which posits a causal link between attitudes, subjective norms, and behavioral
intentions. Both theories define decision-making from different theoretical perspectives. In
addition to these perspectives, certain factors may play a role in an individual’s decision-making
process.
DECISION-MAKING AND GRADUATE SCHOOL DEBT 32
Decision-Making Factors
Students’ personal attributes and social relationships also have been found to exert an
influence on debt decision-making. Researchers have explored relationships between socio-
economic status, ethnicity, parents’ college completion, family economic challenges (e.g.,
mortgage, children, working parent), expected income and return on investment, and influences
of friends and academic mentors, in an attempt to explain this complex process and factors that
influence students decision-making (Hurtado, Eagan, Cabrera, Lin, Park, & Lopez, 2008;
Bourdieus, 1986; Mbilinyi, 2006; Kimmel, Gaylor, Grubbs & Hayes, 2012; Mullen, Goyette &
Soares, 2003; Hua-Yu, Calarco and Kao, 2012). These diverse elements support the argument
that multiple factors exert influence on an individual’s decision-making to enroll in graduate
school and take on debt.
Lin (1999) and Bourdieu (1986) have suggested that social and cultural capital, in the
form of student-faculty interactions are key factors reported by under-represented minority
students for pursuing graduate study. While there are several college impact models that explore
faculty-student relationships and the impact that these have on student persistence and
engagement (Eimers, 2001; Pascarella & Terenzini, 2005, Umbach & Wawrzynski, 2005), there
is limited research that explores this relationship through a social capital lens.
Building on Bourdieu’s (1986) social capital model, Stanton-Salazar (2010) asserts that
students from working-class backgrounds do not have the same level of engagement with
individuals that can transmit or use their social capital to benefit their academic and socio-
economic mobility. Stanton-Salazar (2010) found that underrepresented and underprivileged
youth often do not have a non-family individual that can access and offer support, social capital,
or guidance. Thus, the level and academic support sometimes depends on the faculty members’
DECISION-MAKING AND GRADUATE SCHOOL DEBT 33
own social capital and position within the university structure, specifically within their academic
discipline.
Hua-Yu et al. (2012) studied the influence of adolescent best friends on student college
completion. They found that having resource-rich best friends impacts adolescent college
completion. The study explored how friends’ material and cultural resources influenced college-
going behavior. The researchers found that having a best friend with a college-educated mother
significantly increased the likelihood of college completion. However, having a best friend with
parents of a higher-income level did not necessarily influence college completion. Adolescent
friendships were found to be an unrecognized source of social capital.
Research indicates that a student’s academic experiences may influence the decision to
attend graduate school. Lin (1999) found that a student’s likelihood of graduate school
attendance is enhanced by: (a) connection to their chosen discipline; (b) involvement in
education activities; (c) faculty support; and (d) student connections to their peers. These factors
were found to serve as a source of information, improving the student’s ability to navigate the
educational system (Lin, 1999). Hurtado et al. (2008) found that academic experiences better
enabled students to access opportunities at the undergraduate level, which enhance a student’s
social and cultural capital to navigate graduate school enrollment.
Mbilinyi (2006) identified sense of accomplishment, pursuing interests, higher income,
career change, experience, and role modeling as factors influencing students to return to graduate
school. He also found that family members were often the most influential person in an
individual’s decision to enroll in graduate school. Similarly, Vaccaro and Lovell (2010) found
that family was a central component to women’s motivation and inspiration to succeed in higher
education. Conversely, Kimmel et al. (2012) identified caring for a child or elder, funding for
DECISION-MAKING AND GRADUATE SCHOOL DEBT 34
childcare and college, concern about paying back student loans, time away from family, and
convenience factors related to location and time, as barriers to four-year college enrollment.
These may also impact an individual’s decision to delay graduate school.
Mullen et al. (2003) found that parental education levels had an influence on graduate
school enrollment. They also found that parental education affects graduate enrollment indirectly
through undergraduate institutional selection, educational expectations, and career values. The
researchers found that scoring higher on the SATs and earning higher grades in college
significantly improved a student’s chance of enrolling in a master’s program. For other students,
financial motivations were cited as a reason to return to college after completion of a bachelor’s
degree (Hwang et al., 2013).
The aforementioned theories and factors provide insight into graduate school decision-
making. In some instances, a variety of support systems are in place to assist students in pursuing
a graduate degree. These support systems may include parents, university faculty, best friends,
and mentors. However, these support systems are not always accessible to all students.
Conceptual Framework: Bronfenbrenner’s Bioecological Model of Human Development
A graduate student’s perception about financial debt, the value of a degree, and
understanding the systems in place that support education finance, are shaped by lifetime cultural,
educational and environmental experiences. Human development can be defined at a descriptive
level as “the phenomenon of constancy and change in the characteristics of the person over the
life course” (Bronfenbrenner, 2005, p. 108). These experiences can be explored using the
theoretical framework of the social ecological model. This framework is beneficial in
understanding factors that may affect a student’s likelihood to take on graduate school debt. The
theory validates the importance of gaining a broad conceptualization of student debt decisions
DECISION-MAKING AND GRADUATE SCHOOL DEBT 35
using a non-linear, person-context, systems-interrelated approach, visualizing the student
functioning within larger ever-changing contexts. The following section of this literature review
presents Urie Bronfenbrenner’s (1979) bioecological framework for human development as the
guiding theoretical foundation for this study. The following section will define the framework,
discuss how it has been used in research, and explain its applicability to this proposal.
Brofenbrenner’s framework defines individual’s experiences as working across and
through complex spheres of relationships. He suggests that the development and management of
these relationships are integral to overall development (1979, 1989). Bronfenbrenner posits that
human development involves the interaction of interdependent environmental systems:
microsystem, mesosystem, exosystem, macrosystem, and chronosystem. The microsystem is the
immediate environment where the individual interacts with family members and peers. The
mesosystem reflects the relationships and connections between the individual and his immediate
environment within two or more microsystems (e.g. school and neighborhood). The exosystem is
inclusive of the social settings in which the individual is indirectly being affected, including
economics, politics, and culture. At the macrosystem level, the individual is influenced by
cultural values, social norms and expectations, socio-economic climate and government policies,
for example, financial aid policies. The chronosystem is a time-based dimension that moderates
change across the individual’s life course resulting from interactions across systems. The model
noted in Figure 1, is a visual representation of the most current understanding of the framework.
It displays the interactions between the various systems within Bronfenbrenner’s model and
illustrates the relationship to the individual. Each system is defined by a separate layer within the
figure. The chronosystem was recently included to represent the influence of time on an
individual’s development.
DECISION-MAKING AND GRADUATE SCHOOL DEBT 36
Figure 1. Bronfenbrenner’s Bioecological Model of Human Development

Note. Adapted from www.drewlichtenberger.com. Retrieved on May 2, 2013
Process-Person-Context-Time
Bronfenbrenner offers an operational definition of the social ecological model using the
Process-Person-Context-Time (PPCT) model (Bronfenbrenner & Morris, 1998). In this study,
the researchers have selected PPCT as a theoretical framework to substantiate an understanding
of student debt, including the determinants and barriers to graduate education. The framework
provides a model for qualitative researchers to transform data into meaningful information that
can be used in shaping program and policy improvement.
Bronfenbrenner and Morris (1998) propose an operational research design that allows
simultaneous investigation of four interrelated components that contribute to the social
ecological model, making possible an analysis of mediating and moderating processes. Referred
to as a Process-Person-Context-Time model (PPCT), the model allows assessment of the
individual’s contribution to his or her development. The principal scientific power of the PPCT
DECISION-MAKING AND GRADUATE SCHOOL DEBT 37
lies in its ability to produce new questions by revealing existing inadequacies. Bronfenbrenner
argues that all components of the model must be used in research to provide adequate data to
understand human development (2005).
Bronfenbrenner and Morris (1998) have defined the four PPCT components of the model
process as follows:
Process.
An individual’s life course development takes place through experience with
progressively more complex reciprocal interactions, between the individual and others, objects
and symbols in the environment. The interaction needs to occur on a regular basis over time to be
effective. The resulting enduring interactions are referred to as proximal processes
(Bronfenbrenner & Morris, 1998). Proximal processes operate over time and are posited as the
key mechanism producing human development. The power of the process to affect development
varies significantly as a function of the developing individual and his environment and when the
processes take place.
Person.
There are three types of characteristics (i.e. dispositions, bio-ecological resources,
demand characteristics) that make up the bio-psychosocial person. Each characteristic is
influential in shaping future life course development through their capacity to affect the direction
and power of proximal processes. Dispositions set the proximal processes in motion and can
sustain their functioning. The bio-ecological resources, including ability, experience, skills and
knowledge, are critical for optimum functioning of proximal processes within any stage of
development. The demand characteristics engage or disengage interaction with the social
environment, which can foster or disrupt the proximal processes. The differentiation of the three
DECISION-MAKING AND GRADUATE SCHOOL DEBT 38
characteristics can influence the direction and power of the proximal processes.
Context.
The context of human development is conceptualized as the nested levels, or systems, of
the ecology of human development. Within this context the individual is continually interacting
with parents, relatives, teachers, mentors, spouses, or other individuals. These persons interact
with the individual on a regular basis and possibly over a period of time. The individual assumes
relationships and roles within the context. The interactions can sustain, support, or inhibit
interactions with the environment.
Time.
Human development takes place through the processes of more complex reciprocal
interactions between the individual and the persons, objects, and symbols in the external
environment. The inclusion of time involves the multiple dimensions of temporality, family time,
and historical time. Inclusion in the model allows the researcher to identify the impact of prior
life events and experiences, singularly or sequentially.
Bronfenbrenner’s Work within Related Research
Other research has utilized Bronfenbrenner’s framework to better understand
relationships and decision-making. Hurtado, Alvarez, Guillermo-Wann, Cuellar and Arellano
(2012) have recognized the contribution of Bronfenbrenner’s social ecological framework in
their work, and suggest expanding the framework to include diverse learning environments and
multiple contexts to address needed changes in higher education in the twenty-first century.
Hurtado et al. (2012) propose a model for diverse learning environments that is multi-contextual
and inclusive of the multiple social identities of students, faculty, and staff. The authors suggest
that higher education researchers should incorporate multiple theoretical perspectives when
DECISION-MAKING AND GRADUATE SCHOOL DEBT 39
studying institutional contexts where diversity is present.
Brofenbrenner’s framework has also been applied to the study of developmental
behaviors within complex educational settings (1998). For example, Venegas’ work on high
school aged Latinas and their college-going choices allowed her to gain a broader understanding
of the challenges study participants’ face while saving for college and balancing the needs of
their families (2005). Oliverez, Venegas, and Corwin (2009) have also used the model to discuss
the experiences of low-income students in urban environments as they navigate college choice.
Waters, Cross, and Runions (2009) used the framework to understand teen social connectedness
in schools. Using the ecological framework, Chenoweth and Galliher (2004) examined direct and
indirect factors that influence rural West Virginia high school students’ college attendance
decisions. Leonard (2011) was interested in understanding urban high school community
partnerships. Renn (2008) used a human ecological approach to understand multiracial identity.
Ou and Reynolds (2012) studied youth participating in the Chicago Longitudinal Study to define
early determinates of postsecondary education and college degree attainment. Each study will be
analyzed for their strength in informing the use of the Bronfenbrenner framework in the
proposed study followed by a rationale for using the social ecological framework for the
proposed research study.
Waters et al. (2009) used a systematic search and review process to retrieve scholarly
articles defining school ecology and its influences on connecting students to school and students'
health. Five-hundred and sixty four articles were reviewed searching for nine key phrases.
Drawing from the empirical, descriptive and theoretical literature the authors suggested a
combination of Bronfenbrenner’s ecological model (1979), Deci and Ryan’s self-determination
theory and Connell and Wellborns’s self system process model. Recommendations include using
DECISION-MAKING AND GRADUATE SCHOOL DEBT 40
the model to inform education policy makers and practitioners to understand mechanisms by
which young people become connected to schools and the positive outcomes of those
connections.
Chenoweth and Galliher (2004) studied direct and indirect factors contributing to the
college aspirations of 242 rural high school seniors in West Virginia using Bronfenbrenner’s
ecological systems theory of human development as the theoretical model. Direct sources of
influence included individual’s psychological and biological factors, family environment, school
environment, peers, and college costs weighed against immediate income of employment and
knowledge of availability of financial aid. Indirect sources of influence included geographical
isolation, institutional factors due to lack of available resource and absence of social capital in
school personnel, the effect of poverty, socioeconomic status (dictates educational choices), lack
of income’s effect on cultural exposure, folk culture, and gender roles. The authors found that
consistent with Bronfenbrenner’s ecological systems model using a contextual approach to
understanding academic development provided a rich understanding of student academic
aspirations.
Leonard (2011), using a mixed-methods case study approach, sought to define the
reasons for student success and failure, using Bronfenbrenner’s ecological system theory to
better understand the effects of various school-community partnership strategies on student
outcomes (e.g. graduation, attendance and drop-out rates). His study took a historical approach
studying an underperforming high school, using the five system levels of the social ecological
theory to summarize findings. Significant findings included the importance of recognizing the
interrelatedness of all five levels. Leonard (2011) suggests that while systems-level thinking and
improvement are exciting, the changes do not always drill-down to the individual student. He
DECISION-MAKING AND GRADUATE SCHOOL DEBT 41
suggests a closer look at examining the relationships between all five circles, while recognizing
that significant changes at one level can influence the whole or lead to failure if all levels of the
model are ignored.
Renn and Arnold (2003) proposed that the effects of higher education peer culture and
college student identity development could be explained using Bronfenbrenner’s ecological
model. The greatest strength of the model was potentially its ability to analyze the processes and
outcomes of the peer culture that she sought to study. They hypothesized that placing students at
the concentric center or microsystem and studying the interactions among the immediate
environments (microsystem and mesosystem) served as the force behind campus peer cultures.
Renn and Arnold (2003) argued that human ecology theory should be incorporated into higher
education research because of its ability to analyze processes as well as outcomes.
Ou and Reynolds (2012), using logistical regression, studied variables associated with
school completion and college enrollment, using a sample of economically-disadvantaged
minority youth participants in the Chicago Longitudinal Study. The study investigated children
born in 1980 growing up in high poverty areas in Chicago. The authors used ecological-systems
theory to study the influence of individual characteristics and environmental factors on higher
education attainment. The study revealed that three factors in elementary grade levels can
potentially improve college attendance and bachelor’s degree completion for the population
studied: better classroom adjustment, high parent expectations in the child’s education, and better
academic performance.
Bronfenbrenner and the Proposed Study
Using Bronfenbrenner’s model provides the opportunity for the researcher to study
interactions among organisms and their environment (1998). The model focuses on the
DECISION-MAKING AND GRADUATE SCHOOL DEBT 42
interaction of interdependent environmental systems: microsystem, mesosystem, exosystem,
macrosystem and chronosystem. The interactions among layers in this complex system of
Process-Person-Context-Time (PPCT) affect individual outcomes (Bronfenbrenner, 2005). The
interaction of complex processes, operating at different scales and timeframes, creates the ability
to estimate the synergy within and across the levels of an individual’s ecology that remain
continually interactive. The strength of this model, as an analytic method for looking at social
systems, is that it places the individual at the center. Leonard (2011) argues that the theory
provides an expansive review while maintaining a focus on the individual of interest. The
literature consistently emphasizes the importance of context and the dynamic transaction
between contexts and individual capacities that constantly shape human development and well-
being. Using a qualitative research design, this study will explore the interaction across system
levels and the influence of time on student debt decisions.
The research cited above has explored student decision-making at the secondary and
undergraduate levels using Bronfenbrenner’s social ecological model. No studies of student debt
decision-making at the graduate degree level, using Bronfenbrenner’s framework, were
identified. This study utilizes the theoretical framework to identify and understand what puts
individuals at risk for taking on excessive or inappropriate student debt. This study also explores
how students understand and utilize resources to make financial aid decisions. Both risk and
prevention factors can appear in each system of the theory (microsystem, mesosystem,
exosystem, macrosystem) and can occur over time (chronosystem). Using the PPCT model, the
researchers explore all components of the social ecological model to provide adequate data to
understand student debt decisions. The theory provides a broad conceptualization of student debt
decisions using a non-linear, systems-interrelated approach, with the graduate student
DECISION-MAKING AND GRADUATE SCHOOL DEBT 43
functioning within larger ever-changing contexts with additive effects on development. Finally,
the choice to use Bronfenbrenner builds on the work of previous researchers, such as Fox (1992)
and Weiler (1994), who called for more in depth considerations of graduate school debt and
decision-making based on their quantitative findings.
Summary
This chapter focused predominately on previous literature that exists on the financial aid
decision-making process, relevant studies that have been conducted, and the connection to the
theoretical framework (i.e. Bronfenbrenner’s ecological model for human development).
Bronfenbrenner’s Process-Person-Context-Time (PPCT) model provides a lens through which to
analyze an individual’s contribution to his or her development, including potential determinants
and barriers to graduate school. The literature provided a summary of financial aid decision-
making from the following perspectives: return on investment, perceptions about debt, the value
of a degree, and decision-making processes. The studies revealed that the level of undergraduate
debt can have an impact on one’s pursuit of a graduate degree. In addition, previous research has
indicated that certain groups tend to be more debt-averse than their counterparts. Data also
revealed that while the value of a college degree has increased over time, it has led to an increase
in students enrolling in programs that have lower future earning potential (e.g. education and
health sciences). The research also revealed that decision-making is a complex and dynamic
process. A detailed description of the interview protocol and overall methodological approach
will be discussed in the following chapter.
DECISION-MAKING AND GRADUATE SCHOOL DEBT 44

CHAPTER THREE

METHODOLOGY

As noted in previous chapters, the number of federal student loan borrowers has
increased, and so has their inability to manage that debt (Cunningham & Kienzl, 2011; Fry,
2012). Articles in the mainstream media have even referenced the amount of student loans
incurred by President Obama and First Lady Michelle Obama to pay for their studies. Lewin
(2011) describes this phenomenon as the “anti-dowry.” Studies have provided evidence on the
growing phenomenon of student loan debt (Cunningham & Kienzl, 2011; Doyle, 2013; TICAS,
2011). A study conducted by the Pew Research Center stated that student loan debt more than
doubled from two decades earlier (Fry, 2012). According to the study, in 1989 only 9% of
students owed student debt; in 2010, that figure increased to 19%.
Quantitative studies have addressed questions such as What is the federal student loan
default rate for the class of 2010 cohort? and How much debt did college graduates incur during
their baccalaureate studies? Little is known about how undergraduate debt affects students’
decisions to attend graduate school. Although there is emerging research that attempts to
understand the role that undergraduate debt plays in the decision-making processes of graduate
students, the majority of the literature does not focus on graduate student debt as a primary
factor.
This study used a qualitative inquiry methods approach to examine, interpret, and make
sense of the growing student loan debt phenomenon. Merriam (2009) describes qualitative
inquiry as a holistic approach that provides a depth of understanding that can reveal how an array
of factors interact with one another without disrupting their natural setting. The study also put
into context how graduate students make decisions about incurring debt to fund their graduate
education. The following research question guided this study: What influences students’
DECISION-MAKING AND GRADUATE SCHOOL DEBT 45

decisions about incurring graduate school debt?
Various studies have used qualitative and quantitative inquiry methods to contextualize
the effects of students’ decisions about incurring graduate school debt. Malcom and Dowd
(2012) stated that regardless of race or ethnicity, undergraduate student loan debt served as a
barrier to students enrolling in graduate programs. Baum and Steele (2010) discovered that
students often had a limited understanding of the impact of their loan obligations. Burdman
(2005) indicated that debt aversion had an impact on college access. Millett (2003) revealed that
students with debt greater than $5,000 were less likely to enroll in a graduate program than
students with no undergraduate debt.
This chapter centers on the study’s methodology and research design. The chapter begins
with a definition and rationale for the study design. It then provides details about participant
selection criteria, data collection methods, and data analysis procedures. The chapter concludes
with a discussion of the trustworthiness of the findings, identification of researcher biases, and
the limitations associated with this study.
Definition of Research Approach
Avery and Turner (2012) concluded that while it is easy to show that college is a good
investment for young people, accessing human capital in the form of a graduate degree still
leaves significant unanswered research questions about how students make decisions about
college attendance and student borrowing. One of the goals of this study was to answer the
questions that Avery and Turner (2012) were not able to address using quantitative data analysis.
In order to put into context how graduate students make decisions about incurring student loan
debt to fund their studies, data collection for this study consisted of qualitative interviews.
Merriam (2009) describes qualitative research as focusing on “…how people interpret their
experiences, how they construct their worlds and what meaning they attribute to their
DECISION-MAKING AND GRADUATE SCHOOL DEBT 46

experiences” (p. 5). The goal of this research study was to determine how graduate students think
about student loans and how they make decisions in their educational careers around student
borrowing and debt. By improving the understanding of how graduate students make decisions
about student loans, this applied research will influence policymakers in the creation and revision
of financial aid policy and influence practitioners in the field of financial aid.
The theoretical framework used for this study is based on Bronfenbrenner’s (2005)
ecological framework for human development. In his theoretical framework, humans are seen as
developing based on many interacting and interdependent ecological systems. This framework
was used in the context of this study to identify the many interacting and interdependent systems
that influence graduate student decision-making about student loans. This framework stemmed
from a constructivist epistemological perspective that assumed the social construction of
individual realities (Merriam, 2009). The researchers interpreted and constructed meaning from
the data collected using Bronfenbrenner’s Process-Person-Context-Time model (2005).
The researchers used a semi-structured interview protocol as the primary instrument of
data collection. This allowed for flexibility in data collection because the researchers could
respond and adapt to the data, immediately clarify and summarize responses, and seek additional
information based on the responses received (Merriam, 2009). This study used an inductive
process; the researchers built concepts and theories from the data collected, rather than testing
existing hypotheses. Much of the existing research on student debt approaches the subject from
an economic-based, rational-choice theory model, where student decisions are made based on the
best possible outcome given a cost-benefit analysis (e.g. Avery & Turner, 2012; Malcom &
Dowd, 2012; Youngclaus, Koehler, Kotlikoff & Wiecha, 2013). This study sought to discover
the meaning that graduate students themselves gave to the decision-making process and use that
to construct a concept of how they make decisions about student loan debt.
DECISION-MAKING AND GRADUATE SCHOOL DEBT 47

The primary method of data collection for this study involved interviews with graduate
students. The recorded interviews produced rich and descriptive data that contributed to the
development of an understanding of how graduate students think about student loans (Merriam,
2009). Six researchers conducted between 17-20 interviews with graduate students in one of
three fields: business, education, and health sciences. These interviews were transcribed and
coded, and were the primary data analyzed in this study.
Sample and Population
Previous research on financial aid decision-making has focused primarily on
undergraduate students (Venegas, 2004 & 2007; Burdman, 2005; Choy, 2001) and has utilized
econometric and college choice theories (Venegas, 2004; Rasmussen, 2003). The researchers in
this study investigated how graduate students made decisions about incurring educational loan
debt using Bronfenbrenner’s (2005) ecological framework for human development.
Bronfenbrenner’s Process-Person-Context-Time model served as the theoretical framework from
which the researchers examined family, peer, and school contexts as well as cultural factors that
influenced a student’s decision to incur educational debt (Bronfenbrenner & Morris, 1998).
Graduate students were selected from the master’s degree fields with the highest enrollment
numbers: business, education, and health sciences (Allum et al., 2012). The social ecological
framework allowed the researchers to gain insight into the environmental inputs and interactions
that shape a graduate student’s development and decision to incur educational debt
(Bronfenbrenner, 2005; Venegas, 2004).
In order to ascertain insight into the financial aid decision-making processes at the
graduate level, the study sample included students who were enrolled in a master’s program in
one of the three fields. The following selection criteria were established to identify respondents
for this study: (a) current attendance at an accredited public or private non-profit college or
DECISION-MAKING AND GRADUATE SCHOOL DEBT 48

university in California and (b) enrollment in a master’s degree program in one of three fields
(business, education, or health sciences). Those who had finished graduate school did not qualify
for this study. However, those who had committed to enrolling at the time of the interview but
had not yet attended class qualified to participate. Each researcher interviewed between 17-20
graduate students who met the selection criteria. The respondents were identified using the
snowball method as described in the following section.
Sampling Strategy
The snowball sampling method is one of the most frequently used forms of purposeful
sampling (Bailey, 2008; Babbie, 2012; Merriam, 2009). Snowball sampling involved selecting
key participants who met the selection criteria. After interviewing initial respondents, the
researchers asked each respondent to refer additional participants who met the selection criteria.
This method was utilized until the number of desired respondents was achieved.
Site Selection
There was flexibility within the site selection based on the participants’ field of study (i.e.
business, education, and health sciences). Participants were selected from not-for-profit public
and private universities in California accredited by the Western Association of Schools and
Colleges (WASC). Two researchers focused on interviewing participants from each of the three
fields of study.
Instrumentation
The researchers designed a semi-structured interview protocol consisting of a series of
questions addressing Bronfenbrenner’s PPCT model (Bronfenbrenner and Morris, 1998). The
following question, for example, addressed one of the potential processes a student implemented
when making a decision to incur educational debt: “Did you contact the financial aid office
during your decision-making? If so, how did you contact them and what kinds of information did
DECISION-MAKING AND GRADUATE SCHOOL DEBT 49

you seek?” Other questions focused on whom a student spoke with prior to making the decision
to incur educational debt: “Who did you talk to when making the decision to take on debt for
graduate school? What did you talk about?” Additional questions addressed why a student chose
a particular graduate institution (e.g. "Please tell me the story of how you selected this institution
over others for this degree goal.”) while other questions relate to time (e.g. “Why did you choose
to go graduate school at this time?”). The interview protocol appears in Appendix A.
Data Collection
The qualitative data was collected from students currently attending graduate school.
According to Creswell (2009), qualitative research provides the tools necessary to explore and
understand the meaning of individuals or groups focused on a social or human problem. He also
states that qualitative studies should identify procedures, data collection methods that support an
inductive exploration of the data and a focus on understanding individual meaning. Data
collected in a qualitative research design should be flexible rather than fixed and inductive versus
deductive (Merriam, 2009).
The data was derived from interviews. The researchers relied on a semi-structured
interview protocol in order to maintain consistency across interviews, served as a guide for the
researchers, and supported collection of meaningful data through the use of effective questions.
Advanced preparation of questions also helped the researchers maintain neutrality and limited
their potential biases. Pre-testing of interview questions was completed with individuals
representing the target audience. The outcomes were utilized to revise questions and add
additional questions to the research protocol. The pre-testing also provided an opportunity for the
researchers to test equipment for recording interviews and practice the interview process.
Merriam (2009) suggests that in addition to the interviewers’ skill in conducting the interview,
their ability to develop a level of trust and rapport with the interviewee is critical in assuring
DECISION-MAKING AND GRADUATE SCHOOL DEBT 50

optimum data collection. This relationship was established by clearly presenting the purpose of
the study to the potential participants, explaining the time commitment required, and indicating
the motives and intention of the study using the informed consent process.
Research participants were contacted by phone or email and invited to participate in the
research study. The researchers introduced themselves to the participants and explained the
purpose of the study, sharing potential risks of participation. If the individual agreed to
participate, an interview session was scheduled. The interviews were either conducted in person
or by telephone. The interviews were conducted in a quiet location, free from distractions,
offering privacy and limiting background noise. A pseudonym was assigned to the participant to
assure confidentiality.
The researchers began the interviews by informing the participants of the purpose of the
study and by obtaining their verbal consent. The participants were informed of the steps taken to
ensure confidentiality and to protect the data collected. The researchers notified the participants
that their session would be audio recorded using a smartphone or digital tape recorder.
Immediately following the interview, the researchers reflected on the interview, writing
down emerging themes for each respondent that could be used after the data was transcribed and
reviewed. Maxwell (2013) highlights the importance of ongoing data analysis while data
collection is taking place.
Data Analysis
Qualitative data analysis requires a great deal of organizing so that the researchers can
delve deep, to gain clarity and understanding. To ensure that the researchers were not simply
looking for “interesting quotes,” the six-step data analysis process suggested by Creswell (2009)
provided a guide to the researchers for data analysis. All interviews were transcribed from the
audio files into a written format (Step 1). Data analysis began following the completion of the
DECISION-MAKING AND GRADUATE SCHOOL DEBT 51

first interview. Merriam (2009) suggests that the researcher review the first interview transcript,
“making notations in the margin identifying reflections, tentative themes, hunches, ideas, and
things to pursue that are derived from the first set of data” (p.170). After the second interview
was completed the same protocol was followed. The data was reviewed by comparing the first
and second interviews to inform the development of tentative categories for data grouping (Step
2). Data continued to be analyzed simultaneously during the data collection and coding
processes.
Through a systematic process of data coding, the research team organized data into
clusters, segments, and common themes defining specific categories with a label (Step 3).
Clustering is a process where useful theme meanings cluster together. Researchers suggest
reading transcripts, making notes, defining the underlying meanings, making a list of all topics
discussed, clustering together similar topics, and once defined going back to the transcripts and
writing the codes next to the corresponding segment of text (Creswell, 2009; Merriam, 2009).
Coding is a method whereby shorthand designations are applied to the data so that easy retrieval
allows sorting and organization. Researchers analyzed the findings using the social ecological
framework to support the development of codes and categories.
The research notes and interview recordings were analyzed with openness to emerging
themes (Merriam, 2009). Data was analyzed by highlighting the significant statements and
phrases that provided an understanding of how participants experienced student loan debt and the
influence of life course experiences on decision-making (Step 4). The detailed rendering of
information reflected the social ecological theoretical framework of Bronfenbrenner (2005) using
the Process-Person-Context-Time model (Bronfenbrenner & Morris, 1998).
The next step in the data analysis involved interpretation of the data (Step 5). It is not
enough to comb through the amassed piles of data looking for “interesting quotes.” The
DECISION-MAKING AND GRADUATE SCHOOL DEBT 52

researchers ensured that they looked for contradicting examples that challenged the theories
derived from coding. Creswell (2009) indicates that the researcher must go beyond the codes and
themes to derive the larger meaning of the data.
The final step in the Creswell (2009) data analysis process focuses on presenting the data
(Step 6). The presentation of the data was completed in a manner that captured the essence of the
data collected. Graphs, charts, narratives, tables, and figures were all used to present the findings.
Validity
Validity is a critical issue in research design, as it allows researchers to “distinguish
accounts that are credible from those that are not” (Maxwell, 2013, p. 122). Research that has
been undertaken without regard for validity may lack credibility, leading findings to be called
into question. To ensure the validity of the findings, the researchers identified validity threats and
employed validity tests to increase the credibility of the conclusions.
Researcher bias is a common concern in qualitative research, as subjectivity often shapes
research goals. As researchers who are members of the populations being studyed (graduate
students with varying levels of debt), the researchers were cognizant of their goals, experiences,
assumptions, feelings, and values as they related to the research (Maxwell, 2013). Some
members of this research group currently hold large amounts of student debt and are eager to see
sweeping policy changes to ameliorate this financial burden. Some will be the first in their
family to earn a doctorate degree and took on additional student debt in order to open
opportunities not only for themselves, but also for future generations. Regardless of the
researchers’ reasons for entering graduate school and incurring debt, they acknowledged that the
participants’ stories may have reflected experiences and values that are different from their own,
and honored these stories in the research.
DECISION-MAKING AND GRADUATE SCHOOL DEBT 53

Although it was impossible to eliminate their own values and identities from the study,
the researchers remained aware that they have, in fact, shaped the findings. Maxwell (2013)
discusses “reactivity,” as the influence of the researcher on the research participants. While
conducting interviews, the researchers became part of the world being studied, and the
respondents were “always influenced by the interviewer and the interview situation” (Maxwell,
2013, p. 125). Although the researchers’ aim was to accurately tell the participants’ stories, they
still chose the questions being asked, influencing the final story that was told.
In addition, the researchers checked for validity threats by employing a variety of
strategies, including: collecting rich data, searching for negative evidence, and triangulation. By
interviewing 116 people over a period of six months, the researchers were committed to
collecting rich, descriptive data that provided a full picture of students’ decision-making
processes regarding student debt. These interviews were audio-recorded and transcribed, which
provided a rich and detailed data set that was then coded. With a complete written record of
everything that was said during the interviews, the researchers ensured that they were analyzing
all of the data, and not simply relying on phrases that jump out because they reinforced existing
assumptions. The collaborative research process provided frequent opportunities to triangulate
the data and to search for discrepant evidence. The use of multiple investigators is a form of
triangulation that increased the credibility of the findings, as the researchers analyzed all of the
data and compared their findings. The data was examined rigorously by the research team to
ensure that valid conclusions were made and that data that did not fit neatly within the findings
was not ignored. By asking the other members of the research group to provide feedback on the
conclusions, the researchers checked for flaws in each other’s logic and methods.

DECISION-MAKING AND GRADUATE SCHOOL DEBT 54

Limitations

A limitation of qualitative research is the reduced generalizability of the research findings
(Creswell, 2009). The specific degree programs presented a challenge in generalizing the study.
For example, different expected salaries (i.e. higher for MBA) may yield varying perspectives on
incurring loan debt. Further, data was gathered from graduate students who had incurred loan
debt, but data was not collected from people who may have possibly influenced their decisions
(i.e. family members, peers, mentors, financial aid counselors, etc.). In addition, this study only
presents data collected from students currently enrolled in a master’s degree program. The
perspectives of those who chose not to enroll are not captured in this study. Finally, all loan debt
data was self-reported by the participants.
According to Maxwell (2013), qualitative research is interested in how values and
expectations may have influenced the process and conclusions of the researcher’s study.
Therefore, clarifying the researcher bias is an important aspect of the research process (Creswell,
2009). The subjectivity could be influenced by the varying backgrounds of the researchers (e.g.
gender, culture, and socioeconomic origins) thus affecting the analysis of the findings and
creating bias. Further, all of the researchers for this study were graduate students who had
incurred student loan debt. As a result, the researchers can be viewed as being motivated by a
biased viewpoint relating to student loan debt.
All researchers completed the Human Research Curriculum for Social/Behavioral
Research, through the Collaborative Institutional Training Initiative (CITI), University of
Southern California (USC). The investigation was formally proposed to the institutional review
board (IRB) at USC prior to implementation. IRB approval was received for the student
interview protocol. No data was collected until the study was approved.

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CHAPTER FOUR
RESULTS AND ANALYSIS
The primary purpose of this study was to better understand how students make decisions
to incur graduate school debt. Our study examined factors that influenced graduate students’
decisions by: (a) understanding graduate students’ perceptions about debt and borrowing; (b)
understanding the students’ perceived value of a graduate degree; and (c) understanding graduate
students’ decision-making process about incurring debt to pay for their studies. The researchers
interviewed students enrolled in a graduate degree program in a California public or private not-
for-profit college or university pursing a degree in business, education or health sciences. The
results of this study contribute to the knowledge of financial aid decision-making at the graduate-
level, which may influence how universities provide financial aid information to students and
how students can be better informed when using that information to make decisions about
financing their graduate education. The sample selection will be described and qualitative data
will be reported. This chapter will discuss the three themes that emerged in the data: (a) student
knowledge of borrowing and repayment; (b) advice-seeking behaviors; and (c) return on
investment.
Review of Data Collection Methods
As described in chapter three, this study used qualitative inquiry including a semi-
structured interview protocol as the primary instrument of data collection (see Appendix A:
Interview Protocol). Criteria for study selection included: (a) current attendance at an accredited
public or private non-profit college or university in California and (b) enrollment in a master’s
degree program in one of three fields (business, education, and health sciences). Using a
snowball sample selection method, researchers contacted professors, department chairs, student
services coordinators, and currently enrolled students at public and private universities to
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56
identify qualified interview participants. Participants were presented with the study description
and gave their informed consent before the study was conducted. Each researcher, working in
teams of two for each academic program area, scheduled and conducted a total of 17-20
interviews in-person or by telephone. All interviews were recorded and transcribed. Once an
interview was completed, participants were asked to share information about the study with other
qualified students.
Description of Participants
The demographic characteristics of the participants in this study will be described in the
following categories: age, gender, ethnicity/race, number of children, first-generation, and
relationship status. A breakdown of undergraduate and graduate loan balance, type of university
attended, and cost of graduate program will also be presented. (See Table 2)
One-hundred and sixteen graduate students were interviewed: 39 education students, 37
MBA students, and 40 health sciences students from fields including nursing, nutrition,
occupational therapy and social work. The average age of the participants was 29, with ages
ranging from 21 to 58. The majority of participants were female (70%) and five of the
participants were veterans of the armed services. Fifty-two percent of participants were single,
22% were married, 21% were in a relationship, and 5% were separated or divorced. Only 14% of
the participants had children, and the other 86% had none. Seventy-two percent of participants
had one or two parents with some college education or higher. The remaining 28% were first-
generation students, with neither parent having any form of college-level education. The racial
and ethnic demographics of the participants were as follows: 47% Caucasian, 25% Latino, 12%
Asian, 5% African American, and 13% Biracial or other. Nationally, Caucasian students
comprise 63% of the graduate student population, Latinos 8%, Asians 5.6%, African Americans
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57
12.4%, and Biracial students 1.5%. Compared to nationwide data, the sample for this study had
an overrepresentation of Latinos, Asians, and biracial students, and an underrepresentation of
Caucasian and African American students.
Participants represent 16 different colleges or universities in California, with 71%
attending private non-profit institutions, and 28% attending public institutions. The respondents
represent three systems of higher education in California: the California State University system,
the University of California system, and private institutions. Ninety-eight percent of participants
currently attend graduate school within the greater Southern California area, and the remaining
2% attend graduate school in Northern California. Both part-time and full-time graduate students
participated in this study and their yearly graduate school costs ranged from $6,738 to $56,736.
Table 2
Overview of Research Participants
Female Male
Non-
conforming
Veteran
Non-
Veteran
First-
generation
Non-first
generation
Public
univ.
a
Private
univ.
a
Number 81 34 1 5 111 32 84 33 83
Percentage 70% 29% 1% 4% 96% 28% 72% 29% 71%

Single Married Separated Divorced
In a
relation.
b
Serious
relation.
b
Widow
No
children
1-3
children
Number 60 26 1 5 18 6 1 99 17
Percentage 52% 22% 1% 4% 16% 5% 1% 85% 15%

White African American Latino Asian Biracial/Other
Number 54 6 29 12 15
Percentage 47% 5% 25% 10% 13%
Note.
a
university
b
relationship

Forty-three percent of the participants reported owing educational debt from their
undergraduate degree, with their average undergraduate debt being $25,174. This number is
close to the national average of $29,400 (TICAS, 2013), indicating that the sample is
representative of the graduate student population.
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58
Students were asked to estimate their current loan balance for their graduate degree, and
reported owing between $0 and a $150,000. Seventy-four percent of respondents relied on loans
to fund their graduate studies, with their average debt totaling $45,394. The remaining 26% of
respondents did not have debt, paying for their studies through other sources of funding, such as
grants, scholarships, tuition remission, and savings. Students who did not incur debt are not
included in the debt averages that follow.
Of students holding educational loan debt for their graduate studies, business students
had the most debt, with an average of $60,771. Masters of education students averaged $43,245
in loan debt. Health science students had the lowest average debt at $36,101. Thirty-five percent
of business students had no graduate debt, as compared to 23.7% of education students and
17.5% of health science students. One-fifth of all business students in the sample owed between
$80,000-$90,000 in student loans, compared to only 7.5% of health science students and 2.63%
of education students. No respondents in the health science field had graduate debt over
$100,000, while three students in education and three in business carried graduate loans of
$100,000 or more. Overall, 54% of respondents had less than $29,000 in educational loan debt.
Table 3

Debt by Graduate Program

Amount of debt Health Sciences Education Business TOTAL
No Debt 17.5% 23.7% 35.14% 25%
$0-9,999 2.5% 7.9% 2.70% 4%
$10-19,999 15.0% 10.5% 5.4% 10%
$20,000-29,999 22.5% 7.9% 13.5% 15%
$30,000-39,999 12.5% 10.5% 0% 8%
$40,000-49,999 7.5% 7.9% 2.7% 6%
$50,000-59,999 5.0% 10.5% 0% 5%
$60,000-69,999 2.5% 7.9% 8.1% 6%
$70,000-79,999 5.0% 2.6% 2.7% 3%
$80,000-89,999 7.5% 2.6% 21.6% 10%
$90,000-99,999 2.5% 0% 0% 1%
$100,000+ 0% 7.9% 8.1% 5%
Note. Figures may not add to 100% due to rounding.
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Table 4

Debt by Race/Ethnicity

Race/
Ethnicity
0
$0-
9,999
$10-
19,999
$20-
29,999
$30-
39,999
$40-
49,999
$50-
59,999
$60-
69,999
$70-
79,999
$80-
89,999
$90-
99,999
$100
+
African
American

33% 0% 17% 33% 17% 0% 0% 0% 0% 0% 0% 0%
Caucasian

30% 2% 6% 13% 9% 7% 6% 4% 6% 11% 2% 6%
Asian 42% 0% 8% 8% 8% 0% 0% 0% 8% 17% 0% 8%
Latino 14% 14% 18% 18% 4% 7% 4% 4% 0% 11% 0% 7%
Biracial/
Other

13% 0% 13% 13% 7% 7% 13% 27% 0% 7% 0% 0%
Note. Figures may not add to 100% due to rounding.

Table 4 demonstrates the graduate level debt of the participants by race/ethnicity. Forty-
two percent of Asian students had no debt, compared to 33% of African American, 30% of
Caucasian, 14% of Latino students, and 13% of biracial and other students. A majority of Latino
participants, 64%, had under $29,000 in loans. Only six African American students were
included in this study, and 100% of them had less than $40,000 in loans. One-third of Asian
students had loans above $70,000, compared to 0% of African Americans, 7% of biracial or
other students, 18% of Latinos, and 19% of Caucasians. This may be due to the fact that half of
the Asian student participants in this study were enrolled in MBA programs, which had the
highest price tag of all the programs represented in this study.
Table 5

First-generation Status of Participants by Race/Ethnicity

Race/Ethnicity First-generation Not First-generation
African American 0% 100%
Caucasian 11.1% 88.9%
Asian 25.0% 75.0%
Latino 68.9% 31.0%
Biracial/Other 20.0% 80.0%
Total 32 84
Note. Figures may not add to 100% due to rounding.

Table 5 illustrates the first-generation status of participants by racial/ethnic group. The
first-generation student population was overwhelmingly Latino, with 69% of Latino participants
being first-generation students, compared to zero African Americans, 3% of biracial or other
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60
students, 11% of Caucasians, and 25% of Asians. Table 6 demonstrates the educational loan debt
held by first-generation and non-first-generation students. Twenty-eight percent of non-first-
generation students held no graduate debt, compared to 19% of first-generation students. Only
17% of non-first-generation students faced graduate debt amounts over $70,000, compared to
27% of first-generation students. Of the students with debt, first-generation students had more
debt, owing an average of $50,942 compared to the average debt of $42,890 of non-first-
generation student. The average debt for all participants who took out loans was $45,394; the
data reveals that the loan burden of first-generation students is above average, while that of non-
first-generation students is below average.
Table 6

Amount of Debt by First-generation Status

Amount of debt First-generation Not First-generation
0 18.9% 27.7%
$0-9,999 6.3% 3.6%
$10-19,999 9.4% 10.8%
$20,000-29,999 9.4% 16.9%
$30,000-39,000 9.4% 7.2%
$40,000-49,999 9.4% 4.8%
$50,000-59,999 6.3% 4.8%
$60,000s-69,999 3.1% 7.2%
$70,000-79,999 6.3% 2.4%
$80,000-89,999 9.4% 10.8%
$90,000-99,999 3.1% 0%
$100,000+ 9.4% 3.6%
Note. Figures may not add to 100% due to rounding.

The sections that follow will provide a narrative analysis of the results of the study. A
discussion of themes that emerged from the data will be provided, as well as patterns that were
discovered, based on field of study.
Theme One: Knowledge of Borrowing and Repayment
Student Understanding of Loan Debt and Borrowing Decisions
One major theme in the data relates to student understanding of loan debt and the
borrowing decisions that they make as a result of their level of understanding of loan debt. Many
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61
students stated that they did not understand their student loans. Other students in the survey
population made statements about their student loans and other types of aid that demonstrated
that they had an incomplete understanding of their funding. As a result of this lack of knowledge,
many of the students in our population made poor decisions relating to student loans. At the
same time, other students made responsible borrowing decisions, either based on an
understanding of student loans or because they were avoiding borrowing as much as possible.
Lack of knowledge about student loans.
Many of the master’s-level students interviewed for this study indicated that they did not
understand student loans or financial aid. Some students said that they did not understand student
loans and financial aid as undergraduates. Other students said that they were not knowledgeable
about financial aid and student loans as graduate students. Additionally, some students made
statements about their student loans or financial aid that are incorrect and indicate a lack of
knowledge about financial aid.
Lack of knowledge as undergraduate students.
Forty percent of the students in the interview population stated that they did not
understand their financial aid when they were undergraduates. Many of these students linked
their lack of knowledge as undergraduates to their parents. One student said; “Honestly, I was
pretty removed from the financial aid process. My parents took care of most of it. I really wasn’t
aware of how much debt I had until I graduated…” Another student expressed a similar idea
when she said; “My parents were pretty good in helping me organize that, so I basically wrote
my name on whatever piece of paper I had to and moved forward…” A third student explained
his family’s decision making process as; “…all I know is that my parents said; ‘This is how
much we can afford to give you, this is how much your grandparents can afford to give you, and
the rest you have to take out in loans.’ So they sent me the information and I signed my name…”
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Of the population of students who indicated that they did not understand loans and student aid
when they were undergraduates, a quarter linked their lack of knowledge to their parents.
The rest of the students who indicated a lack of knowledge as undergraduates assigned
this to various factors. One student stated; “…being a first-generation here in the US…I don’t
feel that I was prepared to understand the burdens of financial burdens, of us taking on higher
education…” Four percent attributed their lack of understanding as an undergraduate to their
being first-generation students and not having the cultural capital to understand student loans.
One student said; “Well, when I was eighteen years old, all I understood was I just needed to
apply for FAFSA and get some money.” Another student mirrored this sentiment; “I didn’t really
know much about it [financial aid]. You know, I was pretty young.” Eight percent of this
population tied their lack of understanding as undergraduates to their youth or inexperience at the
time.
A final group of students in this population said that they did not feel that they had
sufficient knowledge about student aid when they went to graduate school, because they did not
borrow student loans as undergraduates. For example, “…my peers more or less had already
done this in their undergrad, but I had no experience in taking loans out [in graduate school].”
Another student said; “[Not taking out loans as an undergraduate] left me a little blindsided as to
what students really have to go through. So that experience led me to not planning ahead…I
didn’t have to really think about it before, I didn’t even know where to begin.” Twenty-one
percent of the population indicated that they lacked an understanding of student aid as an
undergraduate because they did not have to borrow for their undergraduate education. They felt
that this led them to being unprepared for borrowing with insufficient knowledge when they
entered a graduate program.

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Lack of knowledge as graduate students.
In addition to those students who felt that they did not understand student loan borrowing
as an undergraduate student, many students said that they felt that they did not understand
student loans and financial aid as graduate students. One student said; “I don’t honestly know
that much about loans.” Another student expressed concern over her lack of knowledge: “I’m not
very educated about taking out loans and sometimes it makes me nervous about that’s kind of
irresponsible. But at this point I just don’t want to invest the energy into worrying about it, even
though it might be in the long run better.” A third student, when asked about his understanding
of borrowing answered, “Zero understanding.” Seventeen percent of the interview participants
indicated that they felt that they currently did not understand financial aid and student loans as a
graduate student.
In addition to those students who stated upfront that they do not understand student loans
and financial aid, another seven percent of the interview population made statements about their
financial aid that were incorrect and indicate that there are gaps in their knowledge about student
loans or financial aid. One student indicated that he was borrowing the Graduate PLUS loan
because, “That should be your first option, and whatever is left, do the unsubsidized [Stafford
loan].” However federal regulations require that students borrow their full Stafford eligibility
before they can borrow the Graduate PLUS loan. Another student said; “I had a high GPA, and
that’s helped me get scholarships as well as the federal loan.” However student GPA is not a
factor in determining eligibility for federal loans. Two students stated that they had received
federal grants as undergraduates, but that they no longer qualified for those same grants as
graduate students because their income is too high. None of the federal grant programs (Pell
grant, SEOG, etc.) that are available to undergraduates are offered to graduate students,
regardless of the student’s income. One student said, “…another thing that influenced my
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64
decision to be a full time student is that I could apply to financial aid that way. If you are not a
full time student, you don’t really qualify.” Any student who is enrolled at least half-time can
qualify for federal aid. Another student stated that the regulations limiting discharge of student
loans in bankruptcy were passed recently when, “…they really tightened up on the loan
indebtedness…” However, those regulations were passed in the 1970s.
Taken together, twenty-four percent of the interview participants had a lack of knowledge
about student loan borrowing and financial aid as graduate students. Seventeen percent stated
outright that they did not understand financial aid as a graduate student. Another seven percent
made statements about their financial aid or student loans that are incorrect and demonstrate a
lack of knowledge about their financial aid.
Student borrowing decisions.
Many of the interviewed students discussed their decisions about student loans and
funding their education. Many of these decisions reflected poor judgment on the part of the
student. However, more students in the interview population made statements that reflect good
decisions about student loans and borrowing. Some of these good decisions indicated that these
students were making common sense choices about funding their educations. However, many of
these decisions stemmed from a fear of borrowing student loans.
Budgeting and financial planning.
Just over 12 percent of the interviewed population made statements that indicated that
they had not considered budgeting or planning the amount of student loans that they needed to
borrow. Instead they took the maximum loan funding that was made available to them through
their school financial aid office. One of these students explained, “I always just accepted the
maximum because I just thought that was I should do just in case something happened.” Another
student in this group said, “The first quarter I took out the max, just because I wanted the extra
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65
cash…” One student explained his thought process in this way: “If they were going to give it to
me, I was going to take it, figuring that along the way it would get paid off or in the end I would
die and it will never get paid off. Oh well!” Most of these students said that they take the
maximum loan amount that is available to them in order to have extra funding for emergencies.
However, some of the students interviewed indicated that they had carefully budgeted
their expenses for the semester and only borrowed to pay for what they needed. One of these
students described her process as “…I calculate how much I need to pay for tuition and do a
rough estimate with other expenses, and I also think about food and gas and put a number on that
that I think would be good and I decide how much I’m going to borrow.” Another student
explained, “I looked at the budget that [his university] has published for MBA students and um, I
added on a little bit for living and travel expenses, and then I took some of my savings…and then
I calculated the difference.” Overall, nine percent of the students interviewed indicated that they
had calculated a budget to determine the amount of student loans that they needed to borrow.
Borrowing private educational loans vs. avoiding graduate PLUS and private loans.
Two percent of the students interviewed indicated that they were borrowing private
educational loans. One of these students explained, “…I’m very much aware that the best type of
loans are those that are subsidized by the government…I decided at the end of the day that I
preferred to take out a private loan with my bank…” These loans sometimes have a much higher
interest rate than the federal student loans and usually do not have as beneficial repayment terms.
However, other students specifically mentioned limiting themselves to only borrowing
from the federal Stafford loan program; One student explained, “I took the max that they allow
under the federal [Stafford] to receive loan rather than doing the PLUS, which is a different
interest rate.” Another student spoke of the Graduate PLUS program disdainfully: “I didn’t want
to take out a Grad PLUS loan because the Grad PLUS loans are ridiculous.” Three percent of the
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66
students interviewed said that they were limiting their borrowing to the federal Stafford loan
program and avoiding the Graduate PLUS loan or private educational loans.
Borrowing for non-educational costs versus finding non-loan sources of funding.
Some students talked about borrowing student loans to pay for non-educational expenses.
One student said that she did this because of her personal situation: “I took the maximum amount
of the Stafford loans simply because I was going through a divorce…” Another student
explained his borrowing decisions in this way: “I take out a little extra to pay for my car
payments and a little bit on the side in case of emergencies.” A third student said, “…I took out
more at the graduate level partially because, by then I was, I had a house payment to make and
so forth.” Two students indicated that they were borrowing additional funds to help their families
with financial problems. One of these students explained, “I took out a couple more [student
loans] because my mom and I were having financial difficulties when my dad passed away.” The
other student said, “…if I needed money to spend on like food or books…that would have to
come out of loans because I didn’t have any help from my family. And when [my family]
actually needed help from me, I would take out loans.” Less than 10 percent of the students
interviewed talked about borrowing student loans to pay for non-educational expenses.
While some students borrowed student loans for non-educational expenses, other students
sought additional sources of funding to reduce their need for student loans. Some of these
students applied for and received scholarships or assistantships to cover a portion of their
educational costs or sought employment at the institution where they are earning their master’s
degree in order to receive discounted tuition. One student explained this process, “I’ve looked at
ways of deferring the costs. Like working at a campus and getting those benefits, or doing really
well in my program and being awarded a fellowship where the program would be free,
essentially.” Another student said, “My goal this year is to get really involved on campus and
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67
find those sources of funding so that next year, I don’t want to end up with so much debt.” Even
students who do not currently have these types of funding talked about looking for non-loan
funding for future years of their program.
Six percent of participants are working full-time outside of their educational institution
and either receive funding from their employer for their degree program, or are using their
income to pay their way through school. One of these students explained his funding sources:
“I’m paying for the program along with getting reimbursed by my employer for a portion of my
tuition.” However, other students stated that they were paying for their education through the
income they receive from their work. For example, “My second year, I rejected all the loans and
paid for my second year through my salary as a full-time teacher.” Fourteen percent of the
students interviewed discussed ways in which they either have or attempted to find other sources
of funding to reduce their reliance on student loans.
One student volunteered in the military in order to receive a partial payment of her
master’s tuition. She explained; “I don’t think education should be something that someone goes
into debt for, so I never wanted to. So I’ve had many different plans to get my master’s degree
for free, hence joining the military.” This student’s concerns about borrowing student loans
drove her to seek any funding source available to pay for her master’s program. Loan aversion is
a strong motivating factor in the decisions that some students make to seek other sources of
funding for education besides loans.
Casual attitude towards loans versus debt aversion.
While none of the other participants went as far as to volunteer for the military to avoid
borrowing for graduate school, other students expressed an aversion to student loans. These
students said that their concern about student loans caused them stress, anxiety or even fear about
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68
the future. However, another population of students expressed a casual attitude about their
student loans. This attitude contrasted sharply with the concerns of the debt-averse students.
Some of the students interviewed had a very casual attitude about their student loans. One
of these students explained, “I knew I had to pay back the loans, but I kind of figured I had so
many years to pay them off, so I’m not going to worry about it too much now.” Or, as another
student put it, “I was like; ‘Well, I’m already putting debt on debt.’ Like, everyone is doing it
right now.” A third student said; “It may sound irresponsible, but I try not to think about that
[loan debt].” Ten percent of participants made statements that indicated a casual attitude about
student loans.
While some students expressed a casual attitude about student loans, other students made
statements that directly talked about their concern about their student loans. Some students
indicated that they were avoiding moving out of their families’ homes to reduce their loan debt.
For example, “A lot of people are living with their families for the first year [of graduate school].
People are doing whatever they can to save money.” The most commonly mentioned life event
that is impacted by student loan debt is purchasing a home. One student described the decision
that she and her husband made, “What we have decided to do is, we are actually using the money
that we had saved for a house to pay for tuition.” Another student described the decision-making
process to go to graduate school, “If you want to immediately own a house, it’s in your five-year
plan, it’s definitely not a good idea to take out the amount of loans that you’d have to in this
specific degree program.” A third student said, “Because I am paying for school, I have put off
purchasing a house until I complete my MBA. I’m grateful to my parents for allowing me to live
with them while I complete my program.” Six percent of the total population stated that they
were putting off major life events because of their student loan debt.
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69
A smaller population of the students interviewed indicated that they had made decisions
about their education based on limiting the amount of student loan debt they would need to
borrow. One student said; “…I only applied to two schools that were affordable for me to pay for
without going into debt. And then I actually chose [one of the two] because it was the least
expensive of those options.” Another student explained how he selected his graduate university;
“My boss encouraged me to go to [one graduate university], but it was just out of my price range.
I would have had to gone into debt for that. So I chose [another graduate university], because I
could manage that financially.” Four percent of the overall population indicated that they had
made their school choice based on affordability.
Thirteen percent of the population of students interviewed made statements about the
stress, anxiety or fear that borrowing student loans caused them. For example, one student said,
“I was very uncomfortable with the loans and taking down a loan.” Another student said that
after discussing her student loan debt during the interview, “I’m just a little nervous now that I’m
talking to you about it. The fact that now I owe money for the first time, with education.” One of
the students interviewed felt very burdened by her loan debt and described it as, “It’s a big debt
that you are going to carry on for the rest of your life…because once you get into the program,
you’re chained for life [by debt].” A student described student loan debt as; “…truly, truly,
terrifying.” Another student said that she felt that it was, “Just crazy to think that they’re making
us to go into that much debt. It’s just the American way.” One student spoke about the concerns
that her fellow students had expressed to her, “I have fellow classmates…and they’re afraid.
They are afraid of financial aid and student loans and how they are going to pay for $60-$70,000
a year.” Another student expressed her feelings as, “…mostly my anxiety of graduating with loan
and trying to pay it back…” These statements about anxiety, fear and being burdened or
“chained for life” express deep concerns on the part of the students that were interviewed.
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Overall, 33 percent of the students interviewed indicated one of these forms of loan aversion.
This includes the students who spoke about their fears or anxiety around student borrowing,
those who made decisions about their graduate education based on avoiding loans and those
students who discussed postponing life events due to student loans.
Summary
Forty percent of the students who participated in the study said that they did not
understand their student loans or financial aid when they were undergraduates. Twenty-four
percent of the population either stated that they did not understand student loans as graduate
students, or made statements that showed that they did not understand student loans or financial
aid. While many of these students increased their understanding of student loans and financial
aid when they transitioned from undergraduate to graduate education, almost a quarter of the
interviewed population still lacks a complete understanding of their financial aid. Considering
the potential impact of student loans on these student’s futures, that lack of understanding is
troubling.
Many of the students in the interview population made poor decisions about borrowing
student loans. Twenty-six percent of the students interviewed indicated that they were making
decisions that increased their loan borrowing (borrowing the maximum available, borrowing for
non-educational expenses), borrowed higher-interest loans, or had a casual attitude about loan
debt. These poor decisions about student loan borrowing may be related to the lack of knowledge
about student loans and financial aid. However, Thirty-seven percent of the students interviewed
talked about making choices that reduced their borrowing or limited their borrowing to only the
most favorable types of student loans.
These positive borrowing decisions may relate to the anxiety about student loan debt that
many of these students expressed. Students indicated that they were taking actions to limit their
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loan borrowing because of their anxiety about loan debt. But even students who did not try to
limit their loan debt exhibited anxiety or fear. Overall, 33 percent of the students interviewed
made statements exhibiting fear or anxiety about student loan debt and about what awaits them
when they go into loan repayment.
Knowledge of Repayment
Another theme that emerged from the data relates to the participants’ knowledge of
repayment. In this context, repayment refers to the length of time for paying off student loans
and ways to reduce or change loan payments. A total of 116 participants responded to the
following questions from the interview protocol: How long will it take to pay your loans off? Do
you know if there are any ways to reduce or change your loan payments? The responses to these
questions were consolidated and are presented separately below.
Length of time to pay off loans.
Depending on the type of repayment plan, borrowers typically have 10, 20, or 25 years to
repay the balance of their student loans. For example, with the Income-Based Repayment Plan,
borrowers make payments over a period of 25 years. The Standard Repayment Plan, on the other
hand, requires payments over a 10-year period (http://studentaid.ed.gov). Interview responses
indicated that only 12% of participants knew exactly how long it would take to pay off their
loans.
No knowledge of repayment terms.
Ambiguous terms were used by a majority of participants to describe their understanding
of the length of time it would take to pay off their loans. Such words and phrases include, but
are not limited to, “I think,” “I’m not quite sure,” “I’m not too familiar,” “I don’t know,” “I think
like X number of years,” “A long time,” and “It’s gonna take a while.” Others made more
extreme statements such as “the rest of my life” and “forever” to describe the length of time to
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pay off their loans. One student in particular said, “It’ll take me a long time. I don’t know the
exact timeframe…” Another student claimed, “I did a calculation, a financial calculation
through FAFSA last year, I don’t remember but it’s going to be a significant time, I know that
much.” While some students could not provide even an estimate, others gave a potential window
of time.
“I think I’m on a 15-year plan,” described one student. Another student hesitated initially
and then gave an estimate: “That I don’t know depending on how much I can pay, hopefully no
more than somewhere between 5 and 10 years.” A third student stated, “I estimate that it would
probably take me 20-30 [years].” While some students have estimates of their length of
repayment, others are waiting until after graduation to find out what their repayment term will
be.
Waiting until after graduation to find out.
Eighty-eight percent of participants with graduate loan debt mentioned that they do not
know about their repayment timeline and are waiting until they complete their education to find
out. “I honestly have tried to not worry about that yet,” explained one student. “I know that I will
set up a budget as soon as I am done with school…” Another student shared the same sentiment:
I think it would take like 4 years, if I do the minimum. I haven’t really sat down and
made the calculations. I feel like I should be doing those things but at this point it was
one of those, well, I already have it and I have to pay it off and it will take me a while so
I didn’t even worry about that.
This mentality was found across all three fields studied: health sciences, education, and
business. “I haven't really looked into it yet because I don't know what my situation will be after
graduation,” explained one student. Another student mentioned that he does not know his post-
graduation plans and, therefore, would pursue deferment as an option: “I just figure,
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you know, I may have to defer based on where I am at that point. Whether I can be placed in a
position right after graduation or not. So once I’m there I’ll think about it some more.” This
thinking was also found when discussing the ways to reduce or change loan payments.
Ways to reduce or change loan payments.
Several federal repayment plans exist for student borrowers, including Income-Based
Repayment Plan (IBR), Pay As You Earn Repayment Plan, Income-Contingent Repayment Plan
(ICR), Income-Sensitive Plan (ISP), Extended Repayment Plan, Graduated Repayment Plan, and
the 10-year Standard Repayment Plan (http://studentaid.ed.gov). Programs, such as the Public
Service Loan Forgiveness Program and Teacher Loan Forgiveness Program, provide borrowers
an opportunity to reduce or eliminate portions of their student debt if certain criteria are met. As
shown in Table 7, only 56% of participants could name one or more ways to reduce or change
their loan payments.
Table 7
Ways to Reduce or Change Loan Payments
Do you know if there are any ways to reduce or change your loan payments?
Type Deferment Consolidation
Loan
Forgiveness
Income-Based
Repayment
Pay more
monthly
Unsure
Total 8% 6% 31% 8% 3% 44%

Income-based repayment plan.
Income-Based Repayment was designed to reduce monthly payments for students
experiencing a financial hardship during repayment (http://studentaid.ed.gov). According to the
Federal Student Aid website, monthly payments are: based on income and family size (adjusted
each year), usually lower than they are under other plans, never more than the 10-year standard
repayment amount, and made over a period of 25 years (http://studentaid.ed.gov). A small
percentage of participants (i.e. approximately 8%) mentioned Income-Based Repayment as an
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option. One participant explained what the Income-Based Repayment plan would involve for
her:
Yes, there are, one of them is the income based loan repayment program. After I graduate
they take my income that I am earning and take that percentage to come up with
my payment. I feel like there is another one very similar to that but I can’t remember. I
think there is another one that is a little more beneficial and that is if you work at a
nonprofit organization.
Another student tied together the Income-Based Repayment plan with the Public Service Loan
Forgiveness program together: “I plan to do an Income-Based Repayment plan, and I’m hoping
that if I do all the paperwork in the proper time and work, continue to work in education that I
can have my loans relieved after a ten-year period of making on time income-based repayment.”
When asked to give financial aid advice to a cousin or sibling, one participant said, “If you’re
going in the non-profit field, make sure, make sure you’re looking at income based repayment.”
While a small percentage of students mentioned Income-Based Repayment as an option, a
greater amount had knowledge of the Public Service Loan Forgiveness Program.
Public service loan forgiveness program.
The Public Service Loan Forgiveness Program is available to graduates who work in the
public service sector for 10 consecutive years. If 120 on-time loan payments are made, the
balance of the loan (including principal and interest) is forgiven after 10 years. This particular
program, the most referenced, was mentioned by more than 31% of participants as a repayment
option. “I know that there’s a loan forgiveness program I think for social workers or I would say
my low income area or somewhere there’s a lot of need you can get your loans forgiven. I don’t
know what it is exactly. I’d have to look it up on the website.” Though many referred to this
program, few were able to provide accurate details about it. “I know that also with the degree
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that I'm getting there's loan forgiveness if you work for a state agency for 10 years… it forgives
the interest.” While it is true that the interest is forgiven after 10 years, so too is the principal
balance. Another student deemed this program as a possibility but had not done the research to
determine if her particular field would qualify:
The only thing that I still have – that I don’t have a clear understanding of it, I do believe
that as a public district that I’m working for, and I know that they were saying – and I
have to read up on this. I believe that there’s a program out there that if you work for 10
years for a public district, that you’ll be able to – that your debt will be completely gone.
But I don’t know if working for the community college district qualifies for that.
One student specifically mentioned that the loan forgiveness program influenced his
decision to incur debt for graduate school: “They advertised the cost of the program as being not
as important because of the loan forgiveness program with the government. So if I was working
in a not-for-profit for 10 years that my federal loan would be forgiven. That partially influenced
my choice.” In addition to loan forgiveness, the idea of consolidation came up.
Consolidation.
Consolidation programs, such as the Direct Consolidation Loan, allow borrowers to
combine multiple loans into one loan. Six percent of the interview participants referred to this
option when answering the questions posed. One student, for example, stated, “Um, this is the
part that I’m not too familiar with but I think I can consolidate them at some point…” Another
student said, “Well my plan is to look into [it] after [I] graduate school, to look into debt
consolidation as far as for my educational expenses and have it down to paying just one
company.” Regarding consolidation, another explained, “I knew that there was interest
accumulating while in school. I knew that I could consolidate my loans, which I did.” Another
said: “I know that I can consolidate loans because I have a couple of different ones. I know that
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when I'm finished I can seek like personal loans to try and consolidate the ones that I have and
get a lower interest rate so over time I don't pay as much money.” While many students
discussed consolidation as an option, some indicated a need for additional information.
One student mentioned consolidation but did not explain what it entails: “I know that
there is consolidation or things like that.” Another student stated, “I think, I don’t know, I think
you can consolidate them.” One participant admitted, “How I would logistically do it, I think I
would have to go online and research it but I know that you can.” The results indicate that
students tend to know that consolidation exists, however they have a limited understanding of
how the process works.
Deferment.
Deferment temporarily delays the repayment of a student’s loan principal and interest
(http://studentaid.ed.gov). Participants mentioned deferment as an option since most are in
deferment for their undergraduate loans. “I do know of different ways,” explained one
participant. “Deferment and that’s pretty much it.” Some students, however, displayed a limited
understanding of it. “I know there's like something like - on the Internet, like on the fed loans. I
don't know if you can change it. It's more like a deferment and something else, but I can't
remember,” shared one student. Another student explained his potential inability to repay loans
and viewed deferment as an almost certain reality:
I knew that if I were to get a job even part-time - I think it's a 6-month grace period. I
wouldn't even be able to make the first payment. If I did, I'd have to save up every single
penny. …I realize that 2 or 3 years of deference is better than nothing. And yes, I'd rack
up more loans but at least it would increase my job prospects. And going to school part
time doesn't increase my loan without any deference even if I were working, it would
really help.
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Instead of repaying his acquired loans, this student viewed going to school part-time to qualify
for deferment as a more realistic option than being able to make his monthly loan payments.
Another participant had the same idea: “I knew that at any point I could always defer my loans if
I was going back to school.” One participant shared that he and his friend were attending
graduate school specifically to qualify for deferment:
Another one of my friends is saying you know I'm doing graduate work because I want to
defer. That's one reason I chose it - people are saying I can't make enough money to pay
off these loans anyway if I could get a job. Unless I saved literally every penny, which is
impossible.
It should be noted, however, that while deferment delays the principal and interest of loans, it
does not reduce or eliminate a student’s debt. Therefore, those who choose deferment are only
delaying the time in which they are required to repay their loans. During this time, they may
continue to accumulate additional interest, which ultimately increases their total amount of
student loan debt. One student in particular could not say for certain whether his deferred loans
are accruing interest: “Right now I am not paying because it’s in deferment. It’s paused and I
believe I am still accruing interest. The interest is so low from these loans.” While some
participants explicitly use deferment as a means to avoid repayment, others have a limited
understanding of what deferment entails.
Summary of Theme One
Interview results indicate that participants generally have limited knowledge of the length
of time it would take to pay off their loans and the ways to reduce or change their loan payments.
A vast majority of participants shared that they were unsure of their repayment options and
would learn more after graduation. “I have to do more research,” explained one student. This
statement seems to capture the lack of knowledge of repayment that most participants exhibit.
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Students are, therefore, borrowing to finance their master’s degree without having a clear idea of
what repayment will entail. Some students had a limited understanding of Income-Based
Repayment and cited it as a potential path for repayment. The Public Service Loan Forgiveness
Program was, by far, the most popular option; yet, most student responses lacked accurate
specifics about the program. Others discussed consolidation but could not articulate exactly what
it would mean for them personally. Finally, deferment was mentioned as an option despite its
purpose to delay, not reduce or eliminate, student debt.
Theme Two: Seeking Advice on Financing Graduate Education
Four distinct sub-themes emerge related to student’s information-seeking behavior that
influenced student’s decision-making when taking on graduate school debt. Participants were
asked two key questions related to this theme. Question 11 asked students if they had contacted
the university’s financial aid office and if so, what information did they seek and who did they
contact. Question 12 asked participants to discuss who they talked with when making the
decision to take on debt for graduate school. The following four sub-themes emerged: (a)
guidance and advice from trusted personal connections; (b) guidance and advice from a financial
aid office; (c) students conducted their own research about financial aid options; (d) students
made their own graduate financial aid borrowing decision without guidance or mentorship.
Guidance and Advice from Trusted Personal Connections
Seventy-three percent of the participants interviewed spoke with family members, a
spouse or significant other, close friends or college undergraduate faculty mentors, about
borrowing and student loans. Table 8 displays the categories of individuals that were contacted
by students for advice and the number of individuals who provided advice to the participants in
this study.

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Table 8

Number of Individuals Providing Advice by Category

Family
a
Spouse/Sig.
Other
b
Friend(s) Mentor
c
Other
d
No One

Total 34 26 21 10 9 31
Percent 29% 22% 18% 9% 8% 27%
Note. Total respondents (n=116) includes students enrolled in graduate degrees in business (37), education (39) and
health (40). Totals exceed 116 because some respondents spoke with multiple contacts.
a
Family members were defined by participants as family (4), parents (11), father (6), mother (7) and brother or sister
(4).
b
Spouse or significant other was defined by participants as boyfriend, girlfriend, and serious relationship).
c

Mentor was defined by participants as university faculty at undergraduate school attended.
d
Others defined by
participants included: people with financial experience, co-workers who have completed the program, financial aid
administrators, family friend who is an accountant, financial aid advisor.

Participants discussed selecting family members, their spouse or significant other, close
friends or academic mentors for support when making a decision about graduate school debt.
These individuals were described by the students as “expert,” “experienced,” or “well-informed,”
about college financing and student loans. Students sought affirmation that they were making a
good decision with family members (mother, father, brother, sister, grandparent) mentioned most
often as a reliable resource (29%). One student summed up her experience saying, “It’s my best
friend and she just got her masters in school psychology. She’s kind of like an advisor and
confidant with a lot of things in my life. She is very intelligent. She does her homework. I tend to
trust the information I get from her.” Another student said, “My sister has loans for her grad
school and she’s in a PhD program and has loans for that. So I kind of talked to her about it, and
she kind of calmed me down.” Yet another participant reported that her undergraduate faculty
mentor provided advice that was valuable: “I think hearing that from her because she has been in
the field so long really pushed me and I was like okay, you know, I will get my master’s also.”
One student received information and advice from her sister and said, “I was grateful for all the
advice she gave me because it made me more aware that she understood where I was coming
from.” Based on this information, it appeared that respondents were looking for one or a select
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few individuals with whom they could confide-in and trust to provide informed advice and
reassurance on borrowing.
Students reported finding one reliable family member, spouse, friend or mentor versus
multiple sources. The family members that students reported talking to about debt and borrowing
included parents, grandparents, and siblings. When a family member was perceived as being
better informed than another (e.g., father versus mother), the student spoke of going to that
individual only. One study participant spoke of conducting research with her father about the
college programs she applied to and what the costs would be. She stated “We had it all out in
spreadsheets. For me a lot of research went into that.” Another student reported that her father is
an accountant and he “actively dissuaded me from pursing my master’s degree knowing what my
income would be after the degree, and knowing how much it would cost.” Ten percent of
students identified mentors as sources of information. Students reported seeking advice from
these individuals, seeing them as informed and trusted advisors. One student stated “I run all
these things by her; because, I know she’s been through this before and so she gave me lots of
advice on these things and information on debt and borrowing.” Another student reported
speaking with an undergraduate friend who “had taken out loans and I asked him how he felt
about it and was it worth it.” The overarching theme echoed by students was their efforts to seek-
out an informed individual within their inner circle of family, friends and mentors.
While parents were the most often mentioned source of advice, thirteen students reported
that their parents or other family members were unable to provide advice as they had not
attended college or were not familiar with student loans. One first-generation student stated, “I
talked to my parents a little bit, since they did not go to college they didn’t understand what I
was training up for. Why, I would take the debt on?” This student went on to say he just accepted
the fact that he needed to take out a student loan. Another first-generation student stated, “I
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didn’t ask any advice from family, because I am first-generation student, and they are confused
as to why I’m going back to school.” Another student said, “Neither of my parents attended
graduate school, so it was really… I felt a little bit alone in that arena because neither of my
parents really had experience making those decisions.” A lack of parental guidance may limit a
student’s ability to adequately explore all their financial aid options.
Even if parents were unable to adequately discuss financial aid options with their children
six students reported their parents listened to their plans. One student reported, “I told my parents
I was going to borrow”. Another student reported “I mentioned it to my parents briefly.” A third
student reported “I talked to them after I took the loan.” While these parents listened, two student
reported withholding information from their parents fearing they would not approve or be
disappointed. One student reported, “I am pretty sure my parents have no idea how much I have
in debt. I don’t think they need to know. It wouldn’t make them feel any better. I don’t want
them to think like oh my god their daughter owes so much money. I don’t want them to feel bad
they weren’t able to help me pay for that.” This same individual reported that she would tell her
friends how much she is borrowing; however, she did not report talking with anyone for advice
on borrowing nor did she contact the financial aid office for advice or guidance.
Unfortunately, two parents actively discouraged their students from borrowing student
loans. The first student stated, “I didn’t really talk to my parents because my parents don’t
believe in taking out loans. They believe in paying yourself and I knew they weren’t going to
agree with that.” A second student stated “my dad did the calculations and did not think the
master’s degree was a good investment and discouraged me from attending.” For these two
individuals they reported speaking with “close” and “best” friends in addition to their parents for
advice in making a decision and ultimately decided to pursue the graduate degree. Luckily a
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small percentage of students, unable to speak with family or friends, were able to reach out to
financial aid counselors or resources available through the university financial aid office.
Guidance and Advice from a Financial Aid Office
When asked if they had contacted the university’s financial aid office 30% of those
interviewed reported making contact. Participant contacts with the financial aid office can be
divided into the following categories: (a) Accessing information on the web-page; (b) Telephone
contact; and (c) Email correspondence. Student contact with the financial aid office is
summarized in Table 9. Only five percent (5%) of participants reported attending a face-to-face
meeting in a financial aid office. Of the 70% of participants who reported not contacting the
financial aid office, some students reported receiving limited financial aid information from their
academic department or orientation session.
Table 9

Contact with Financial Aid (FA) Office and Types of Contact by Number of Occurrences

Contact
Financial
Aid - No
Contact
Financial
Aid- Yes
Types of Contact for Those Responding Yes
b
Meeting Telephone Webpage Email
Total
a
81 35 6 20 27 2
Percentage 70% 30% 11% 36% 49% 4%
Note.
a
N=116.
b
N=35, students reported multiple contacts.
Six students recalled completing a required on-line tutorial to borrow federal student
loans. Two students reported receiving “a large packet of information” on financial aid in the
mail. One student reported that she did not need to contact the financial aid office because she
knew how to apply for federal loans and was able to get information from on-line resources. She
went on to say she completed the online FAFSA training but did not ever talk to anyone.
Twenty-seven students reported accessing information they needed through the federal student
aid website or the university financial aid on-line resources.
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Students spoke of the challenges they faced in getting the financial aid information from
their university’s financial aid office they felt was needed to make decisions. While students
reported the information from the financial aid office was accessible, they did not feel that the
information provided enough information to make an informed decision. One student shared
“My experience with the financial aid office here felt a lot like the DMV. It didn’t have as much
of the personal connection. For the Master’s degree they didn’t really provide as many venues to
talk about the cost or the benefits as much [as undergrad university].” Another student reported
that she did not contact the financial aid office before being accepted into the program and was
not contacted by the financial aid office until after she was accepted.
Contacting the university’s financial aid office after the federal financial aid award was
given was another common theme reported by students. Twenty-two students spoke of
contacting the financial aid office at their university after they had accepted federal loans, to gain
additional information. They reported asking about when and how their funds would be received,
if they could borrow less than approved by FAFSA and clarification on the loan process. One
student spoke of here surprise when she contacted the financial aid office after accepting the full
amount of the Stafford Loan she was given, only to find out she could not reduce the amount of
the loan awarded. This same student did not report any contact with the financial aid office until
after her award was accepted. This was a repeated theme with several students reporting they
accepted the full amount of the loan, not knowing they could reduce the award amount before
accepting the loan.
Students Conducted their Own Research about Financial Aid Options
Of the 27% (see Table 8) of students who did not contact anyone before making a
decision about borrowing at least half spoke of “finding all the information I need on the web
pages online.” These individuals reported conducting their own research on financial aid options
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rather than talking with family, friends, mentors or a spouse. Several students articulated
spending long periods of time conducting research (mostly online) as they prepared to return for
a master’s degree. A number of students reported being very detailed with analysis of options
“developing spreadsheets” to weigh the pros and cons of various schools. Twenty-three percent
of students reported accessing web-based financial aid information. One student reported, “[I]
developed spreadsheets and models to try to guess what my liabilities would be depending on
what the market and the government does. So I was extremely well-informed in my decisions to
take the loans out.” Another student reported, “The information was available online and it is just
a matter of reading it.” One student reported that she conducted her own research: “The bulk of it
was during my undergrad degree and the loans I took out then and how exactly that worked and I
made sure that I researched the loans and tried to find the best ones.” Students’ access to and use
of web-based information in decision-making was supported by the data.
Students Made their own Graduate Financial Aid Borrowing Decision without Guidance or
Mentorship
Thirty-one participants told the researchers that they did not contact anyone when making
a decision about student loan borrowing. While some of these students reported conducting their
own research, ten individuals stated they conducted little or no research. There were two groups
in this category, five individuals who stated the chose to fund their own graduate degree
expenses and did not need to seek any guidance on borrowing and four individuals who told the
researchers they felt they had no other choice but to take the loan so they could receive their
degree as a required step in attaining their career goal. One student reported he “really didn’t talk
to anybody, now that I think about it. I was just looking at the end result, which is to obtain a
master’s degree. I didn’t really think about the financial.” Another student stated that he felt his
friends and family would talk him out of taking out loans and “for me actually like I don’t have a
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choice because I do want to get a master’s degree and there is no other way for me in order to
pay for school. I just have to do that.” Another student stated she believed there were no options
“I really just want to go to graduate school.” This strong commitment to the degree strengthens
our findings that students are willingly taking the loans without fully understanding the long-
term consequences of repayment. Alternatively other students reported pursuing significant
research before taking loans.
Summary of Theme Two
Graduate students reported three primary sources of information they relied on when
making decisions about graduate debt and financing their degree program, these included family
members, close friends or university mentors who were experienced or well-informed about
college financing and student loans; the university financial aid offices and online resources
accessed through students own independent research. While 73% of participants reported
speaking with few individuals including family members, close friends and mentors, 27% of the
students reporting not speaking with anyone about post-baccalaureate borrowing or debt. First
generation students reported sharing information with their parent(s) but felt their parents were
not able to provide needed guidance. Only 30% of participants reported contacting the university
financial aid office for information on borrowing and loans. Of that group only six individuals
reported meeting with a representative in the financial aid office and almost half reported the
contact was accessing information on the Webpage. Twenty-seven percent (27%) of the students
reported they did not talk with anyone about financial decision-making, half of this group
reported conducting their own research primarily using online resources and the other half
reported made an uninformed decision to borrow, with their future career growth overshadowing
the importance of seeking advice.

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Theme Three: Return on Investment (ROI)
A final theme that emerged from the data relates to education loan debt and return on
investment. Within this theme, career mobility, networking, and institutional prestige were
regarded as contributions to return on investment.
Career Mobility
Ninety-eight percent of the participants, regardless of educational field, mentioned career
mobility as a reason for pursuing a graduate degree. Career mobility played an integral role in
the decision of participants to pursue a graduate degree. Participants were asked: How does this
degree fit into your next steps professionally? Participants described their next steps
professionally without any hesitation or inhibitions with the researchers. Participant after
participant described how important their graduate degree was to their ability to be promoted or
to move up the career ladder professionally. One participant put it in the following manner:
“…having an undergraduate degree in psychology would limit me extremely in terms of entry-
level positions. If I did get an entry level position there would be little to move up unless I was
there for like 10-20 years...” Another participant stated, “…I always valued education. I went
back to grad school and got my MBA. I felt that made me more marketable and put me in a
position where I’m actually enjoying what I’m doing and definitely striving for the best...”
Career mobility was a major motivating factor regardless of the type of institution the participant
attended.
The participants’ educational programs also had no variances in regards to career
mobility aspirations. Participants in business, education, and health programs all felt that their
graduate degree would provide them with the necessary training to move up. Most students are
willing to incur debt in order to gain career mobility. Seventy-four percent of participants are
incurring debt to fund their graduate degree program. Career mobility is an important factor
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influencing students’ willingness to borrow student loans. One of the participants summed up
this point in the following way, “We talked about basically it was worth taking out all this money
and would it pay off in the long run and things of that sort… I guess we all agree that it would.
We’re taking this risk to have a better education, have more stability in our life, and we want a
career. I guess that’s the best price you have to take.” Another student expressed his feelings
about a graduate degree in the following manner, “I understand the realities that if I want to raise
a family with my significant other, if I want to buy a home, especially in these economic times,
salary is important and I cannot deny that… and an administrator, for example in my last district,
and incoming assistant principal started at about $108,000 dollars….” Another student stated, “I
know that for myself being a young Latina woman with kids I’m doing it and steadily year-after-
year has been steadily salary increase for me. So I don’t think that’s all coincidence, I think it has
to fall in line with that fact I know I’m in debt financially for education…” Participants’
responses indicated their belief that their graduate degree would provide them with the necessary
tools to be promoted. The responses were consistent within all the graduate programs regardless
of institution and the cost of their attendance.
Institutional Prestige
Institutional prestige, or the reputation accorded to an institution of higher education,
played a role in the decision-making processes of graduate students. Thirty-four percent of all
respondents identified institutional prestige as a factor in their decision-making processes.
Institutional prestige played a larger role in the decision-making processes of students at private
institutions, with 46% of private school students mentioning prestige as a factor, compared to
only 6% of students at public institutions. This difference remained consistent with students at
similarly ranked schools, with 54% of students at highly ranked private schools and only 15% of
students at highly ranked public schools mentioning prestige as a factor. Students at public
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institutions were more likely to cite cost-effectiveness and proximity to their current residence as
priorities in their decision-making, rather than institutional prestige. Of the students mentioning
prestige as a factor, 55% of them were in education programs, 34% in health sciences, and 16%
in business. Institutional prestige is subjective and dynamic, and was discussed differently by the
respondents, with regards to the school’s impressiveness to others, ranking systems, job
placement expectations, professional networking opportunities, and program-specific factors.
Impressiveness to others.
Fifty percent of the students who spoke of institutional prestige focused on its
impressiveness to others: how others would perceive them. No students from public universities
mentioned this idea, and the 38 respondents who spoke of it were all enrolled at the same private
institution. Students spoke about their degrees “looking good to others,” echoing the sentiment of
a participant who stated, “I chose this institution because of its name.” They used words like
“name brand” to describe the institutional prestige of their universities. One student commented,
“[This institution] is just so well-known. I chose this school because it was highly recommended,
and because of its name brand.” Students spoke of their school as one that commanded respect
and admiration from others. When asked why he chose to attend this particular institution, one
participant responded, “It’s a respected school, so that had a lot to do with it.” Another student
stated that her school’s prestige played a role in her decision-making process, saying, “You read
about it, and it’s one of the best, top-notch schools for this program. It’s very reputable.”
Students at this private institution strongly believed in the value of their degree.
Students in education and the health sciences were more likely to discuss institutional
prestige with regard to its impressiveness to others. Over half of the education and health
sciences students (53% and 54%, respectively) who mentioned institutional prestige spoke about
it in terms of the school’s impressiveness to others. Education students spoke proudly of the
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perceived value of their degree, and the way in which others would view them. One student said,
“It’s just the prestige. There’s a lot of prestige to this institution and I’m happy to be here. This is
the place to be.” Another student commented, “[This institution’s] program is very strong in
higher education, and I was like, if I have this degree, it looks really nice.” Another student
acknowledged that the school’s “prestige, name, and branding played a huge part” in her
decision-making process. A student in the health sciences spoke of his school, saying, “It’s very
reputable. You just hear the name and you’re like ‘wait.’ Even now, I’m still like, ‘I’m a student
here.’” These students clearly believe in the value of their degree and the respect that it will bring
them.
Several students spoke about their family’s support of their university, which influenced
their perception of the school’s prestige. One respondent commented, “My mom always
mentioned, oh it’s a great school.” Another participant stated, “It was important to my family
that I come to this school. It’s a fantastic school.” A third participant commented, “This school
has name recognition. I was convinced by my parents that it is good that have those…letters after
your name somewhere.” Family members played an influential role in a student’s perception of
institutional prestige, as they provide explicit messages about the reputation of a school.
Rankings.
National rankings played a role in the decision-making process of students. Thirty-nine
percent of students who spoke of institutional prestige stated that their school’s rank played a
role in their decision-making. These students knew their schools’ place in national ranking
systems, stating that their schools were “highly rated,” “number one,” or “top ten.” Their
schools’ rank factored into their decision-making process, and was often used to justify the price
tag of the school. As one student said, “The rankings are important. When I compared the cost to
the type of education and how prestigious it was, this school was the best out of all of them. I
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figured that with the stronger the name, the higher the chance I would get hired and the higher
the chance I would get a better paying job.” Students believe that attending a high-ranking school
will pay off in the future. Another student discussed her decision-making process in the
following way: “I knew that wherever I go I’m going to have to take out loans for tuition, so I
might as well go to a school that is credible and has a good reputation. In looking for what school
to go to, I looked at the best programs.” When searching for “best” programs, students often turn
to national rankings to guide their decision-making. When asked why she did not apply to an
institution near her home, a student responded, “They were not in the Top 20.” Rankings appear
to be a trusted measurement of quality for these students, influencing the schools that they
choose to apply to and attend.
Rankings played the largest role for health sciences students, with 62% of the students
who mentioned institutional prestige specifically referring to their school’s rank. When asked
why she chose to attend her institution, a student responded, “Well, I just looked at all the
occupational therapy schools in the nation, and I looked at how they were ranked. [This
institution] was ranked number one…I just wanted to go to the best program.” Only one business
student mentioned rankings, commenting that his school was a “Top 30 program.” Business
students were more likely to point to other indicators of institutional prestige, such as job
placement.
Job placement expectations.
Almost one-third of the students who spoke of institutional prestige felt that the prestige
of their school would assist them with job placement opportunities. One student commented,
“Employers will recognize this degree, versus one from a smaller state school.” Another student
agreed with this sentiment, stating, “I’m likely to get hired across the country, just because it’s
an outstanding program here.” Another student stated, “My peers are going into the workforce
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with a comparable education, but not necessarily a famous degree. They are going to make far
less.” These students believed that they had an advantage over students from other schools.
Business students were more likely to speak of the prestige of their program with regard
to job placement and career opportunities. They spoke about their school’s “placement rate,”
“legitimacy in helping with a career path,” and going to school with “people who will probably
be running companies in ten years.” Education and health science students also spoke about job
placement, but less frequently than they spoke about their school’s rank and the perceived
impressiveness of their degrees.
Networking
Networking played a role in the decision-making process of students, as they weighed the
immediate and long-term opportunities that the university’s network would provide. Around
25% of participants spoke of future outcomes that would result from networking at their
university. Sixteen percent of the 44 students attending state universities reported networking
opportunities. Alternatively, 63% of students at private universities reported networking
opportunities. Students had positive perceptions of networks, equated with future earning
potential, personal contacts leading to education camaraderie, future employment, and
professional mentorship.
Business students spoke favorably about the networking opportunities afforded by their
universities, believing that it added to the value of their degree. A student attending a private
university reported, “Part of the MBA experience is getting to know the people, networking,
having that sort of enriching experience.” Another student attending the same university
reported, “I heard very good things about the alumni and how they kind of help each other out.”
This sentiment was repeated by another student, who said, “if you’re going to do business school
in [this region of] California, then it’s an awful good thing to be an alum [of this institution]. The
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familial network is helpful.” Students believed that networking opportunities enhanced their
educational experiences and future possibilities. When reflecting on the value of his degree, one
student shared, “There are lot of things that make business worthwhile, lots of networking
events, a lot of the socializing… just meeting and being around those other people that are full-
time business students that are creating and not relying on a job.” Students shared their
expectations and knowledge about the university’s network and described the potential outcomes
that would result from the student’s affiliation with the university.
Program-specific factors.
Only 18% of students who spoke about institutional prestige referred to program-specific
factors. While most students spoke about rankings, being impressive, networking opportunities,
and perceived employment advantages, very few related an institution’s prestige to its faculty,
course offerings, or professional opportunities. One business student spoke about his program’s
job placement rate, and a health sciences student spoke about her school’s National Board pass
rate. One student mentioned hearing about positive experiences from graduates of the program.
The way in which students perceive institutional prestige appears to be based more on
perceptions by outsiders and national rankings, rather than program-specific factors.
Return on Investment
Obtaining a graduate degree was seen as a wise decision that would yield major
dividends on their return on investment. Participants viewed obtaining their graduate degree as a
necessary stepping-stone to their professional mobility. Participants were asked specific
questions that put into context their perceived value of earning a graduate degree. One
participant explained it in the following manner: “It’s very expensive, maybe because of the
private institution that I joined. But, I feel like it’s very worth it because when you finish it, it’ll
pay back itself with all the experience and all the knowledge you gained, and it looks good on
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paper, with a Masters…” Another participant stated, “Just that I believe that education debt is the
best kind of debt. People say good debt is like your mortgage payment. That's a real investment
in your future…I think education debt specifically at the level of graduate education is probably
the best kind…” Of the 116 participants 114 or 98% of them mentioned that their graduate
degree would have an impact on their career trajectory and, for the most, part participants
mentioned in some form or other that a graduate degree was worth the return on their investment
(ROI).
Further, it appeared that the participants felt that the only option for advancement or to
change a career was to enroll in graduate school and the trade-off of incurring student loan debt
was worth their investment. One of the participants in education stated their return on investment
as, “I didn’t even think about the cost. It was unconsciously there, but at the same time I was just
thinking, it’s an investment, and the amount of money that you could make given the right
opportunity and the right school and the right job, you can pay that back.” A health education
participant justified incurring debt in the following manner: “So, right now if I’m making 58,000
[dollars], in 2 years just by becoming an administrator I can make almost 110,000 [dollars]. So
again, it’s not something that’s driving what I’m doing, but I also know that that would give me a
lot of financial security and allow me to do all of the things that I want to do.” A business
education participant stated, “I
also
heard
that
the
job
market
was
more
and
more
competitive
and

you
weren’t
taken
seriously
if
you
didn’t
have
a
masters.”

Of the 86 participants with student debt, their current combined student loan debt is
$3,903,928.00, which equates to an average debt of $45,394.51 per student with debt.
Participants did mention when asked to give advice to a sibling to try other avenues to pay for
their graduate degree, but if their only option was taking out loans, their advice was “Go for it.”
The participants believe that incurring debt is a worthwhile investment in their future.
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Table 10

Average Graduate Debt by Field of Study

Business Education Health Fields Combined
Amount of Debt $60,770.83 $43,244.83 36,100.85 $45,394.51
Note. This figure reflects the average educational loan debt of graduate students with debt.

The data in Table 10 exemplifies participants’ willingness to incur debt to pay for their
graduate degrees by educational programs. Participants pursuing a degree in business had the
highest combined debt as well as average debt; their combined debt totaled $1,458,500.00 with
an average debt of $60,770.83 per student. Participants pursuing graduate degrees in education
exhibited the next highest debt with a combined debt of $1,254,000.00. This averaged to
$43,244.83 per student pursuing a graduate degree in education. Of the three programs, students
pursuing graduate degrees in health had the lowest combined debt of $1,191,328.00, with an
average debt of $36,100.85 per student. As a society, education is still viewed as a wise
investment that results in a positive return on investment throughout a student’s lifetime.
Summary of Theme Three
Participants overwhelmingly responded that career mobility played a vital role in their
decision to pursue a graduate degree. Ninety-eight percent of the respondents, regardless of
graduate education goal, identified a master’s degree as a necessary tool critical to their ability to
get promoted and move up professionally. Students attending both private and public universities
perceived their graduate degree as integral for their upward mobility. Career mobility was also
identified as an important factor motivating students’ willingness to borrow student loans.
Seventy-four percent of the participants took out loans to pay for their graduate degrees.
In addition, institutional prestige played a role in the decision-making process of one-
third of the participants in this study, which influenced the perceived valued of their degree.
Participants used national ranking information and their perceptions of the universities’
impressiveness to others to justify attending and paying for their graduate education. Private
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university students were more likely to cite institutional prestige as a factor in their decision-
making process than students at public universities. Business students were more likely to
attribute a university’s prestige to its networking and job placement opportunities, whereas
education and health sciences students attributed prestige to national rankings and perceived
impressiveness to others. Once students have chosen to attend graduate school, they must then
make decisions about financing their education.
Finally, participants’ willingness to incur student loan debt stemmed from a belief that
their graduate education was an investment in their future. The participants viewed their student
loans as good debt that resulted in a return on their investment. Further, participants in some
cases felt that the only option for advancement or to change a career was to enroll in graduate
school, and perhaps the trade-off was to incur student loan debt. Even when this was the case
participants’ still viewed this as an investment in their future with positive upside to their return
on investment.
Conclusion
As the nation’s student debt continues to soar, it has become even more crucial to
determine what influences a student’s decision to borrow. Participant interviews yielded the
following relevant themes related to graduate debt decision-making: (a) knowledge of borrowing
and repayment; (b) seeking financial aid advice; and (c) return on investment.
Forty percent of the students in this study indicated that they did not understand student
loans or financial aid when they were undergraduates. Twenty-four percent of the master’s
students interviewed lacked a full understanding of their current student loans or financial aid.
This lack of knowledge about student loans led to different types of behavior when these
students made decisions about student loan borrowing. Twenty-six percent of the students in the
study talked about making decisions that increased the amount of loans they borrowed, increased
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the amount borrowed in loan types with unfavorable interest rates or had a casual attitude about
loan borrowing. Thirty-seven percent of the students in this population talked about making
choices that reduced their borrowing or limited it to only the loans with the most favorable
interest rates. These borrowing decisions may relate to anxiety about student loan debt. Overall,
33 percent of the students interviewed made statements exhibiting fear or anxiety about student
loan debt.
Only 9% of participants with loan debt could indicate the length of their repayment
term. A vast majority of participants shared that they were unsure of their repayment timeline
and options and would learn more after graduation. “I have to do more research,” explained one
student. This statement seems to capture the lack of repayment knowledge that most participants
exhibit. Students are, therefore, borrowing to finance their master’s degree without having a clear
idea of what repayment will entail. Seventy-six percent of participants with loan debt mentioned
an option to reduce or change their loan payments. Some students had a limited understanding of
Income-Based Repayment, but cited it as a potential path for repayment. The Public Service
Loan Forgiveness Program was, by far, the most popular option; yet, most student responses
lacked accurate specifics about the program. Others discussed consolidation but could not
articulate exactly what it would mean for them. Finally, deferment was mentioned as an option
despite its purpose to delay, not reduce or eliminate, student debt. Ultimately, students who
borrow have an obligation to repay their loans. Defaulting on student loans can have serious
implications.
In addition, four distinct sub-themes emerge related to a student seeking advice when
making the decision to incur graduate school debt. The four sub-themes included student’s (a)
reliance on trusted family, friends and mentors; (b) contact with the financial aid office; (c)
conducting their own research and (d) making their own decision. Students sought out few
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trusted and known individuals, seeking the most experienced or well-informed individuals to
help them in their decision-making about college financing and student loans. While the
university financial aid offices and online resources were other sources of information, they were
poorly accessed. Many students spoke of conducting their own research, primarily online.
Twenty-seven percent (27%) of students reported not seeking advice about post-baccalaureate
borrowing or debt. Several students reported making an uninformed decision because their
commitment to gain the master’s degree clouded their interest in seeking guidance. First
generation students reported sharing information with their parent(s) but felt their parents were
not able to provide needed guidance.
Seventy-three percent of research study participants identified family members, spouses
or significant others, close friends and undergraduate university mentors as individuals providing
advice that helped shape their decision-making about borrowing. These individual reported few
contacts, often identifying only one individual family member or friend they contacted. The
remaining 27% reported not talking to anyone before making a decision about borrowing. Of this
population, around half spoke of conducting their own research using webpage and other
resources. The second source of information students accessed was federal and university-based
financial aid offices with only 30% of our respondents reporting contacts. Only 5% of students in
the study reported meeting face-to-face with a financial aid counselor prior to borrowing. Online
financial aid resources were a significant source of information for many students with 80% of
the 34 participants who reported contacting the financial aid office reporting visiting the
webpage for information.
Finally, return on investment emerged as a major theme. Ninety-eight percent of
participants across the fields of business, education, and health sciences identified career
mobility as a motivating factor in seeking a master’s degree. The desire for career mobility
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appears to influence decision-making about student loan debt. Most participants felt that the only
option for advancement was to enroll in graduate school. Furthermore, thirty-four percent of the
participants in this study indicated that the prestige of their institution played a part in their
graduate decision-making. Students at public institutions were more likely to describe cost-
effectiveness and proximity as factors in their graduate school decision-making, with only 6% of
public university students referring to institutional prestige as a factor. Of those students who
discussed the prestige of their institution as a factor, 55% were in education programs, 34% were
in health sciences and 16% were in business. Institutional prestige was described in different
terms by students; some referred to the school’s reputation or ranking, others to job placement
expectations or the strength of the educational program. Ultimately, the trade-off of incurring
student loan debt for a graduate degree is perceived as being worth the investment.
Overall, these findings have implications on theory, policy, and practice around graduate
student aid as well as future research opportunities, which will be discussed in the following
chapter.
DECISION-MAKING AND GRADUATE SCHOOL DEBT 99
CHAPTER FIVE
DISCUSSION, IMPLICATIONS, AND RECOMMENDATIONS
This chapter presents the findings of the study, as well as implications for practice and
future research. The findings are discussed through the lens of Bronfenbrenner’s social
ecological model (2005), with particular emphasis on graduate students’ decision-making
processes within the Process-Person-Context-Time (PPCT) model. The findings of the study are
presented as three themes: borrowing and repayment, advice-seeking behaviors, and return on
investment, which are analyzed through the PPCT model. The implications of each theme are
also discussed as part of the analysis. The chapter then discusses larger implications for practice
for institutions of higher education and state and federal governments. The chapter concludes
with a discussion of possibilities for future research.
This qualitative study sought to answer the research question: What influences students’
decisions about incurring graduate school debt? The team of researchers conducted 116
interviews with master’s degree students in education, health sciences, and business programs.
After these interviews were recorded, transcribed, and then coded, three themes emerged in the
data. Student decision-making about financial aid was a process that involved student knowledge
about borrowing and repayment, advice-seeking behavior, and perceptions about return on
investment. Each theme will be further discussed, using Bronfenbrenner’s PPCT model as a
conceptual framework. The PPCT model includes four dynamic components that interact with
one another and contribute to the development of an individual and institutions. The first
component is Process, which refers to interactions over time between a person and his or her
environment. The second component is Person, which refers to the individual dispositions,
resources, and characteristics of an individual. Context is the third component of the model, and
involves interconnected systems, including environments, relationships, cultures, and historical
DECISION-MAKING AND GRADUATE SCHOOL DEBT 100
circumstances. The last component of the model is Time, which involves multiple dimensions of
temporality, family time, and historical time. In the sections that follow, the findings from the
study will be analyzed in relation to Bronfenbrenner’s work, to illustrate how individuals’
financial aid decision-making processes are a product of the interplay between process, person,
context, and time factors. Bronfenbrenner’s model is bidirectional, and allows for institutions to
also be shaped and changed by individuals. These potential changes are discussed in the section
on implications for educational institutions and the government.
Analysis and Implications
Student Understanding of Loan Debt and Borrowing Decisions
This section examines the findings of this study about student understanding of loan debt
and the decisions that students make about loan borrowing. Some of the participants in this study
described lacking an understanding of student loan debt as undergraduates. Many of them also
lack knowledge of student loan debt as graduate students. This lack of knowledge may cause
these students to make poor borrowing decisions. Additionally, some of the loan borrowing
decisions made by these students may relate to their fear of loan debt and debt-averse behavior.
This section will use Bronfenbrenner’s (2005) PPCT model as the framework for analysis of
these themes and will also help define the implications of this data.
Lack of knowledge about student loans.
Forty percent of the students who participated in this study said that they did not
understand their student loans or financial aid when they were undergraduates. Twenty-four
percent of the population either stated that they did not understand student loans as graduate
students, or made statements that showed that they did not understand student loans or financial
aid. While many of these students increased their understanding of student loans and financial
DECISION-MAKING AND GRADUATE SCHOOL DEBT 101
aid when they transitioned from undergraduate to graduate education, almost a quarter of the
interviewed population still lacks a complete understanding of their financial aid.
Tierney and Venegas (2009) found that a lack of information about financial aid acted as
a barrier to college attendance, especially among low-income high school students. Forty percent
of the students surveyed in this study indicated that they did not understand student loans or
financial aid when they were undergraduates. For this group of students, their lack of knowledge
about student aid did not act as a barrier to them attending college and completing their
undergraduate degrees. It also did not act as a barrier to their persistence to graduate school.
However, because only students who enrolled in graduate programs were interviewed for this
study, this data does not reflect the experience of students who decided not to attend graduate
school because they did not have sufficient information about student loans and financial aid.
Based on earlier research, Dwyer, Hodson, and McCloud (2012) indicated that many
students start their undergraduate educational careers relatively uniformed about debt. They also
noted that student concern about loan debt grows over the course of a student’s time in college as
they approach graduation and repayment (Dwyer, Hodson & McCloud, 2012). Using
Bronfenbrenner’s (2005) Process, Person, Context, Time (PPCT) model as a framework to
examine the development of knowledge about student loan debt by the study participants, we can
see that there has been change over time for some of these students. While 40% of the
participants in the study indicated that they did not understand student loan debt as
undergraduates, 24% displayed a lack of understanding as graduate students. This change could
be due to the increase in concern about student loan debt that Dwyer, Hodson, and McCloud
(2012) noted as occurring among undergraduates. As these students moved closer to completing
their undergraduate degrees, their concern about their future ability to pay their student loans
increased, causing then to look for information about financial aid. This increase in knowledge
DECISION-MAKING AND GRADUATE SCHOOL DEBT 102
may have had an effect on the decisions that the participants made about borrowing as graduate
students.
Baum and Steele (2010) found that undergraduate students often had limited
understanding of student loan debt and that this led to poor borrowing decisions including over-
borrowing. This is mirrored in the behavior reported by some of the graduate students in this
study. Of the 24% of students who lacked an understanding of student loans as graduate students,
62% also made poor decisions about borrowing student loans as graduate students. The link
between a lack of understanding about student loan debt and poor borrowing behavior that Baum
and Steele (2010) found is evident in this data.
Student borrowing decisions.
Many of the students in the interview population made poor decisions about borrowing
student loans. In chapter 4, this population of students was defined as those who borrowed the
maximum available in student loans, borrowed for non-educational expenses, borrowed higher-
interest loans, and had a casual attitude about their loan debt. Twenty-six percent of the students
interviewed indicated that they were making poor borrowing decisions (as defined above). These
poor decisions about student loan borrowing may be related to the lack of knowledge about
student loans and financial aid. However, thirty-seven percent of interviewees talked about
making good borrowing decisions. In chapter four, good or positive borrowing decisions were
defined as carefully budgeting expenses to reduce loan borrowing, avoiding high-interest
Graduate PLUS and private educational loans, and seeking non-loan sources of educational
funding.
These positive borrowing decisions may relate to the anxiety about student loan debt that
many of these students expressed. Students indicated that they were taking actions to limit their
loan borrowing because of their anxiety about student loan debt. But even students who did not
DECISION-MAKING AND GRADUATE SCHOOL DEBT 103
try to limit their loan debt exhibited anxiety or fear. Overall, 33% of the students interviewed
made statements exhibiting fear or anxiety about student loan debt and about what awaits them
when they go into loan repayment.
In their study of undergraduate student loan borrowing, Avery and Turner (2012) found
that students often have a difficult time making rational decisions because they cannot always
properly estimate the value of their education, in increased earning potential, in relationship to
the cost of the loans that they are borrowing to fund their education. The graduate students in this
study seem to have a very clear understanding of both the potential income of someone with a
master’s degree in their future profession, and the necessity of getting a master’s degree to
advance their careers. This indicates that there is a difference in the graduate students
participating in this study and the undergraduates that Avery and Turner (2012) examined.
Avery and Turner (2012) articulated a concern that the focus on student loan debt in the
popular media would drive students to debt-averse behavior, which can act as a detriment to the
student’s educational success. For example, they link working in college to fund educational
expenses to reduced educational outcomes (Avery & Turner, 2012). Burdman (2005) also
included working while in school and attending college part-time as decisions that can have a
negative impact on educational success for undergraduate students. Six percent of the
participants in this study talked about working while going to graduate school as a means to
finance their education (either directly through the use of their income to pay for tuition, or
through employer-related tuition remission programs). Those participants who worked also
enrolled part-time in their graduate programs in order to balance work and school. Avery and
Turner’s (2012) and Burdman’s (2005) discussion of the negative effects of working on
undergraduate student educational outcomes may or may not be applicable to graduate students.
DECISION-MAKING AND GRADUATE SCHOOL DEBT 104
Avery and Turner’s (2012) concern about debt-averse behavior is reflected in the
statements made by the participants in this study. A third of the students interviewed spoke about
being debt-averse or engaging in debt-averse behavior. Many of the participants sought other
sources of funding for their graduate education in order to avoid borrowing student loans. While
some of this debt-averse behavior was within the context of the student’s workplace or university,
such as seeking assistantships to help fund their educational costs, other examples of this
behavior extended outside of this context. An example of this is the student who delayed
attending graduate school in order to serve a term in the military so that she would qualify for
educational benefits for veterans. This student’s debt-aversion caused her to engage in behavior
that delayed her education and her future career.
Burdman (2005) describes student loan debt as an impediment to future (post-education)
plans such as having children or purchasing a home. Few of the participants in this study
discussed delaying having children, and 15% of the participants already have children. However,
six percent of the participants discussed delaying life-plans such as purchasing a home. A
smaller population of students discussed living with their parents or grandparents to avoid
borrowing for living expenses. The decisions that some of the participants in this study made
support Burdman’s (2005) view that student loan debt can impede future life-plans. However,
some examples of debt-averse behavior can also act to impede future plans. Students who seek
funding through employment also reported attending school part-time, delaying their degree
completion and the start of their post-graduate careers. The example of the student who sought
military service also shows the potential delay of future plans, both educational and career, that
can come from being debt-averse. Based on the evidence of this study, borrowing student loans
and avoiding student loans can lead to delays in life-plans.

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Student borrowing through the PPCT lens.
Examining student borrowing decisions through the lens of Bronfenbrenner’s PPCT
model provides some insight into the student loan-related decisions made by the participants in
this study. The first factor that affects these borrowing decisions is the Person - in this case the
characteristics of the student making the decision. Bronfenbrenner (2005) describes one of the
types of individual characteristics as “resource characteristics.” In the context of this study, a
type of resource characteristic is the student’s understanding of financial aid and student loan
borrowing. Another category of individual characteristics that Bronfenbrenner (2005) describes
is “force characteristics.” An example of a force characteristic for participants in this study is the
individual student’s level of debt-aversion.
The second factor in the PPCT model is Context. This factor can be seen in the study
through the interactions of the different micro and meso-systems surrounding the participants.
Many students describe their lack of knowledge about student loan debt as being the result of
their parent’s managing their financial aid when they were undergraduates. On a macro-system
level, a college student who is over the age of 18 is considered old enough to be responsible for
their finances and should be involved in making decisions about funding their own education.
This should impact the student’s development and decision-making through the micro-system of
the educational institution; for example, bills are sent to the student rather than the parent,
financial aid applications are completed by the student, etc. But, clearly the family micro-system,
interacting with the school or education micro-system, creates a meso-system where the student
is excluded from these financial decisions. This may occur due to altruistic concerns on the part
of the student’s parents in trying to shelter their child from the financial responsibility of their
own education, but ten percent of the participants in this study indicated that they lacked a
sufficient understanding of student loans and financial aid (as graduate students) because their
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parents managed their undergraduate aid. This means that this particular interaction of contexts,
when examined over the time when the student moved from their undergraduate program to
graduate school, resulted in the student feeling that they were at a disadvantage because they
lacked knowledge that would have helped them through the aid process as graduate students.
This leads to the last factor in Bronfenbrenner’s (2005) PPCT model: Time. Because this
was not a longitudinal study, data is not available to examine changes in student borrowing
decisions over time. The data does support a limited amount of analysis using the Time factor of
the PPCT model. For example, by comparing the 40% of students who described themselves as
having no understanding of student aid as an undergraduate with the 24% who lacked an
understanding of student loans and financial aid as graduate students, some changes in student
understanding of student loan borrowing and financial aid over time are apparent. Where
possible, the analysis below will incorporate the Time factor of the PPCT model.
The Person factor is the primary component influencing the borrowing decisions
described in this section of the study. Participants in the study expressed two characteristics that
impacted their borrowing decisions. The first is the resource characteristic of knowledge of
student loans and financial aid. Twenty-four percent of the population lacked an understanding
of student loans and financial aid. This lack of knowledge may be a contributing factor to the
26% of participants who either made poor borrowing decisions or expressed a casual attitude
about their student loan debt. The other characteristic that impacted the borrowing decisions of
participants in this study was the force characteristic of debt-aversion. This characteristic led
37% of the participants to make responsible borrowing decisions such as seeking non-loan
sources of funding, limiting the amount they borrowed, and favoring the loans with the lowest
interest rates.
DECISION-MAKING AND GRADUATE SCHOOL DEBT 107
This debt-aversion characteristic may be linked to fear of student loan debt. A third of the
participants expressed their debt-aversion, either through their decisions or through statements of
fear or anxiety about student loan debt. Ten percent of the participants expressed a casual attitude
about student loans. But even this could be interpreted as fear or anxiety about student loans.
These students made statements indicating that they didn’t want to “worry” about their loan debt
now. They may be postponing thinking about their loan debt out of fear or anxiety that they are
experiencing as a result of that loan debt. This fear or anxiety could be a result of their individual
force characteristics like temperament or motivation. The fear mechanism could also be context
related - a result of the student’s family or friends (micro-systems) instilling a fear of being in
debt. It could also be exo-system related - a friend or family member who experienced problems
with debt that didn’t directly affect the student but had an indirect impact on the student by
providing an example of negative outcomes from debt. Fear of debt could also be related to past
events in the student’s own life - a bankruptcy or other financial situation that caused the student
to be debt-averse. Finally, the context could be related to the national media macro-system.
Avery and Turner (2012) felt that the media attention to student loan debt and the fear of a
“student loan bubble” could cause students to be debt-averse. This may be playing out in the fear
of student loan debt expressed by the participants in this study.
Knowledge of Repayment
This section examines the responses of the study participants relating to their
understanding of loan repayment. The participants in this study demonstrated a lack of
knowledge about loan repayment. Many students were unable to explain the amount of time it
will take them to repay their student loans. While over half of the students with student loan debt
were able to name a way to reduce their loan payments, they were not able to provide details
about specific programs. Just as with the lack of knowledge about student loan borrowing, this
DECISION-MAKING AND GRADUATE SCHOOL DEBT 108
lack of knowledge about student loan repayment may have serious consequences for the
participants in this study. This section will use Bronfenbrenner’s (2005) PPCT model as the
framework for analysis of these themes and the model will also help define the implications of
this data.
Length of time to pay off loans.
Eighty-eight percent of the participants in this study, who had graduate loan debt, were
unable to clearly articulate how long it will take them to pay off their student loans. These
students used ambiguous terms to define the length of time they believe that they will be in
repayment such as “a long time,” or they provided widely varying ranges of time from five to
thirty years. The process for federal student loans requires that students participate in an on-line
“entrance-counseling” session when they first borrow a federal student loan (U.S. Department of
Education, 2013). This entrance counseling is a 30-minute online course that includes
information on the length of time it takes to repay a loan under the various repayment programs,
and a calculator that students can use to determine their monthly payment amounts on the
various repayment programs. This is a mandatory training that all federal student loan borrowers
must complete to receive their loans, but it is clear that the participants in this study were unable
to recall the information that they read in this online training.
Length of time through the PPCT lens.
Examining these results through the lens of Bronfenbrenner’s (2005) PPCT model
provides some insight into the participant’s lack of knowledge about the length of time needed to
pay off their student loans. Using the Person factor to examine this issue, it is possible that these
students lack the mental resources to understand the loan repayment information that they read in
their entrance counseling session. Given that 88% of the participants who have student loans are
unable to accurately state their loan repayment period, it seems unlikely that all of these graduate
DECISION-MAKING AND GRADUATE SCHOOL DEBT 109
students lack the cognitive ability to understand this information. What seems more likely is that
they may be lacking the “force” characteristic of motivation and are simply not motivated to pay
attention to the information on loan repayment when it is presented to them. Because entrance
loan counseling is an online process that allows the student to simply click through multiple
choice questions, it is possible that these students have rushed through the training to resolve this
requirement for receiving their loan funding, rather than using it as an opportunity to learn about
their loans.
The PPCT factor of Time may also play a part in this issue. Students only need to
complete their entrance loan counseling one time at the start of their graduate program, and they
are not required to complete that requirement again in future years (U.S. Department of
Education, 2013). This means that students are presented with this information at the very start
of their program and then they start their academic studies. Once they start classes, these students
may be too overwhelmed with information and are unable to retain what they learned about
student loan repayment.
Additionally, most of the participants felt that they did not need to learn about loan
repayment until they graduate and go into repayment. This is another aspect of the Time factor;
these students are delaying learning about loan repayment until they complete their graduate
programs. Clearly, there is an expectation on the part of the U.S. Department of Education
(2013) that students should be thinking about loan repayment when they first borrow their
federal student loans, because the loan repayment information is included in the online entrance
loan counseling. But the majority of the participants in this study indicated that they do not
believe that they need to be concerned about loan repayment until they graduate. This delayed
learning about loan repayment may cause these students to make poor borrowing decisions and
may even impact their decision-making process when they decide to attend graduate school.
DECISION-MAKING AND GRADUATE SCHOOL DEBT 110
Ways to reduce or change loan payments.
Fifty-six percent of the participants with student loan debt could name one or more ways
to reduce of change their loan payments. For example, 31% of the participants in the education
and health-profession master’s programs were aware of the Public Service Loan Forgiveness
program. While these students were able to name different types of repayment or loan-
forgiveness programs, they were often unable to provide any specific details on these programs.
They knew that the programs existed or at least had heard the names of the programs, but they
were unable to clearly explain how these programs work.
As discussed in the previous section, 88% of the participants were unable to articulate the
length of time it takes to repay their student loans. The standard repayment plan for federal
student loans is a ten-year repayment period (U.S. Department of Education, 2013). The Public
Service Loan Forgiveness program only allows a student’s loans to be forgiven after the first 120
on-time monthly loan payments, which is ten years of repayment (U.S. Department of Education,
2013). So, only students on one of the repayment plans with repayment period of longer than ten
years would benefit from Public Service Loan Forgiveness. In order to participate in one of the
repayment plans with a longer repayment period (Income-Based Repayment, for example),
students have to apply when they go into repayment. Otherwise they are placed on the standard
repayment plan of ten years (U.S. Department of Education, 2013). Students, who are borrowing
based on an incomplete understanding of Public Service Loan Forgiveness, may go into
repayment without knowing that they need to apply for one of the longer-payment period
programs in order to gain the benefits of the program. If these students are making the decision
to fund their graduate school programs with student loans, and perhaps to attend more expensive
programs, because they believe that they will be able to benefit from federal loan forgiveness
programs in the future, then the student’s lack of understanding about loan repayment could
DECISION-MAKING AND GRADUATE SCHOOL DEBT 111
cause them to make poor decisions when they initially decide to go to graduate school and fund
their education with student loans.
Ways to reduce or change loan payments through the lens of PPCT.
Examining these results through using Bronfenbrenner’s (2005) PPCT model provides
additional insight into what factors may be influencing student decision-making. As with the
student’s lack of knowledge about the repayment period on their federal student loans, there may
be a Person factor at work - a lack of motivation to learn about loan repayment. This lack of
motivation may relate to the Time factor of PPCT. Just as with the lack of knowledge about loan
repayment periods, the participants may be delaying learning about types of loan repayment
options until they graduate and go into repayment.
There is also a Context-related factor at work here. Thirty-one percent of the participants,
primarily in the education and health-profession master’s programs, were aware of the Public
Service Loan Forgiveness program. This may reflect a context-related dissemination of
information, either through the micro-system of their fellow students in the same academic
program, or through the micro-system of the information provided by their school’s admissions
department when they were recruited into their program. None of the participants discussed
where they heard about the Public Service Loan Forgiveness program. If it was through their
fellow students within their academic program, this could relate to the theme of advice-seeking
discussed in the next section. However, if these students learned about the Public Service Loan
Forgiveness program through their university admissions office, this would be something that
should be of concern to educational practitioners. These students are aware of this program,
without being able to provide specific information about the program. Some of these students
may have felt that the existence of this program made graduate loans more attractive because the
loans can be partially forgiven after they start their professional career. If that is the case, then
DECISION-MAKING AND GRADUATE SCHOOL DEBT 112
informing them about the program, without providing the details that these students should have
to make an informed decision, would be ethically questionable. This is a topic that deserves
examination in future research as it has major implications for students who incur educational
loan debt because of the availability of the Public Service Loan Forgiveness program.
Summary
The primary factor in Bronfenbrenner’s (2005) PPCT model that affects the student loan
borrowing decisions described in this section is the Person factor. The individual characteristics
of lacking understanding of student loans and debt-aversion influenced many of the student loan
borrowing decisions that were described by participants in this study. The secondary factor
influencing these decisions is defined by the context in which these students make their loan
borrowing decisions. These decisions are made by students within the context of their work,
family and educational micro-systems and the interactions of these three influences on decision-
making.
Although this study was not conducted longitudinally, which reduces the amount of data
that could be collected to speak to changes in student understanding of student loans and
decision-making about student loans over time, there are some time-related implications in the
data. The difference between the number of participants who indicated a lack of understanding of
loans and financial aid as undergraduates and the smaller number who lacked this type of
understanding as graduate students implies a change in this understanding over time for some of
these students. Additionally, many of these students may be borrowing student loans based on a
misunderstanding of their ability to take advantage of federal loan forgiveness programs when
they go into loan repayment. This may have significant consequences for these students in the
future.

DECISION-MAKING AND GRADUATE SCHOOL DEBT 113
Seeking Advice on Financing Graduate Education
While empirical research sheds some light on debt decision-making and students’
information-seeking behavior at the post-secondary school level, to date research has not been
conducted exploring the debt decision-making process for post-baccalaureate students. Thus,
little is known about what factors may be associated with a graduate student’s decision to incur
student debt and the dialogue that a student engages in with others which shapes the student’s
perception about financial debt, the value of a degree, and understanding the systems in place
that support education finance. Findings from students interviewed provides a snapshot of the
behavior of graduate students in business, education and health sciences at public and private
universities in CA, as they seek information and support about college debt and financial aid
borrowing to enable optimum decision-making. Findings will be summarized by sub-theme.
Guidance and Advice from Trusted Personal Connections
This study found that almost three-quarters of the students interviewed identified a family
member, spouse, friend or university mentor as a resource they relied on for graduate debt
decision-making. Participants spoke of making contact with few individuals in their process of
making a decision to take on college debt. In addition they suggested that given the choice, they
selected the most informed and experienced individuals who were well-known to them. The
pattern of information seeking behavior seemed to relate to the students need to not only find a
trusted peer who can speak about finances confidentially, but also an individual who had
knowledge or experience with loans and borrowing or college financial aid processes and
resources. This phenomenon was supported in students reporting that when a family member was
perceived as being better informed than another family member (e.g., father versus mother); the
student spoke of going to the informed family member only.
DECISION-MAKING AND GRADUATE SCHOOL DEBT 114
This study provides evidence students speak with few individuals about borrowing and
finances. It could be that this topic is a private topic and students are uncomfortable discussing
their finances with people they do not know well or individuals who are uninformed about
student debt and borrowing. Together these findings suggest that policy-makers while
establishing information resources for potential graduate college students will need to recognize
the limited information seeking behavior of students, understanding their preference to confide in
close peers and immediate family members for decision-making. These findings are important
because the study shows that students, even at the graduate level are guarded in the information
they are comfortable discussing in a public setting. The study found that students were not
relying on financial aid counselor at the university when discussing personal financial matters in
the same fashion as they shared with family and close friends. These findings are consistent with
research conducted by O’Connor, Hammack and Scott (2009) and Tierney and Venegas (2009),
who found first generation and Latino students lacked enough information to make successful
decisions about student loan debt.
While family members were the most often cited resource (29%) that students reported
relying on for affirmation and support in decision-making, 26% of the students were married or
reported they were in a serious relationship. These students reported they more often spoke of
their spouse or significant other as their primary contact for decision-making. Students who
reported confiding in their spouse or significant other spoke about family finances and future
financial commitments that weighed heavily on their joint decision-making. Students spoke of
delaying having children, purchasing a home and delaying purchase of a new car. Because some
students chose to not work while completing the graduate degree full-time they spoke of talking
with their spouse or significant other about paying household expenses and living on the spouse
or significant other’s income for the duration of the degree program. This joint decision-making
DECISION-MAKING AND GRADUATE SCHOOL DEBT 115
was imperative considering the financial burden of the graduate student would affect the short-
term and long-term finances of the family unit. These study results suggest that student debt
decision-making for students in a committed relationship impacts other family members and
potentially could serve as a barrier to graduate education if the family was not in a position to
support the student’s financial commitment and supports Cunningham and Kienzl’s (2011)
research that argues that student debt levels have become unmanageable and will have long-term
impact on other life choices and consumption patterns of households with student loan debt.
The ten percent of students who identified a university mentor as sources of information
reported these individuals as informed and trusted advisors and in most cases were
knowledgeable about the graduate degree program the student was seeking or they had pursued
the same degree. These students spoke warmly about the relationship they had, some over
several years, with undergraduate faculty who engaged in supportive discussions around
graduate school decisions. Students’ under-utilization of undergraduate faculty as a reliable
source of information for decision-making is disappointing. Students interviewed who lacked
family members or friends to rely on for decision-making, would likely benefit from having a
faculty-member who not only understands the students career path, but also the academic
requirement and options for graduate education as a trusted mentor. One might expect that more
students would access university faculty for decision-making. It is unclear why this information
resource was underutilized. Could it be that the discussion of money and borrowing again serves
as a barrier to having more public discussions with university faculty or are faculty uninformed
about student borrowing and debt and thus are not volunteering to advice? These study results
suggest that given the acknowledgement of undergraduate faculty serving as trusted resources for
students considering graduate education, this resource could potentially be increased through
training, raising awareness and providing resources to faculty.
DECISION-MAKING AND GRADUATE SCHOOL DEBT 116
While parents were the most often mentioned source of advice, first-generation college
students reported that their parents or other family members were unable to provide advice as
they had not attended college or were not familiar with student loans. In addition, this lack of
knowledge of parents was stressful for students who reported feeling alone in their decision-
making and in a few instances students withheld information from their parents or were told to
forgo graduate school. This lack of parental guidance may limit a student’s ability to adequately
explore all their financial aid options or seek a graduate degree. Previous research with
undergraduate students related to parent’s inability to support student financial aid decision-
making correlates with the research from this study with graduate students (Immerwahr, 2003;
Tomas Rivera Policy Institute, 2004).
Guidance and Advice from a Financial Aid Office
It was expected that graduate students in this study would access information from the
university financial aid office when making decisions about student debt and borrowing. The 16
public and private universities in California that student’s report attending had financial aid
resources for students available, including financial counselors, Web-based resources, and group
information sessions. The study found that only 30% of participants reported contacting the
financial aid office for support. Even more surprising was that only 6 student reported meeting
with a financial aid advisor at the university. Almost half of the students who reported contacting
the financial aid office reported their contact was a visit to the financial aid Website. This type of
contact is very different than a one-on-one meeting with a financial aid advisor. Thirty-six
percent (36%) of students who contacted the financial aid office reported speaking with a
financial aid advisor by telephone. A small number of students reported hearing from financial
aid advisors at the graduate program orientation, typically after they had accepted a federal loan
to cover their college costs. While students reported the information from the financial aid office
DECISION-MAKING AND GRADUATE SCHOOL DEBT 117
was accessible, they did not feel that the information provided enough information to make an
informed decision. This study provides evidence that university financial aid resources are (a)
being under-utilized, (b) reaching students after financial decisions have been made and (c) not
providing specific information to the degree program the student is seeking and therefore the
information is not understood in a form that is useful in decision-making. For first-generation
students, Choy (2004) and Burdman (2005) suggest that students rely on the financial aid experts
to demystify the financial aid process. In our study, students relied on experts for support in
decision-making confirming similar findings as reported by Choy (2004) and Burdman (2005).
Students Conducted their Own Research about Financial Aid Options
Fifteen students reported conducting their own research when making a decision about
student debt and borrowing. The availability of student loan and federal borrowing information
accessible via the Internet was reported by most of these students interviewed as a primary
source of information used for decision-making. These students reported not contacting an
individual for advice on borrowing and instead reported their preference to conduct their own
research. Empirical research has not been conducted that explores graduate students use of Web-
based information in making student loan decisions so it is not clear if the internet is a reliable
resource for graduate student decision-making about school loans. We do know that the internet
is unfortunately a resource for students to access the unsubstantiated stories of mainstream media
including statements in popular press like the New York Times (Lewin, 2011) quoting President
Obama’s statement about his “mountain of loan debt”. This type of information has the potential
of providing misinformation that may relate to poor decision-making or over-borrowing. Given
that students are relying heavily on the internet as a component of their information-seeking
behavior it is important going forward that Web-based information is evidence-based and
specific enough to allow a student to make an informed decision if they chose to rely on the
DECISION-MAKING AND GRADUATE SCHOOL DEBT 118
internet as their only source of information. Using multiple sources of Web-based information
was reported by a number of students who spoke of conducting extensive research as part of their
decision-making.
A number of students provided very detailed specifics of their decision-making process
including data analysis using excel spreadsheets that enabled them to weigh the pros and cons of
various schools and various tuition and cost of living projections. One of these students reported
“The information was available online and it is just a matter of reading it.” Another student
reported conducting her own research, “during my undergrad degree and the loans I took out
then and how exactly that worked and I made sure that I researched the loans and tried to find the
best ones.” For some students who possess the financial knowledge and are able to access online
resources it is conceivable that all information can be gathered and decisions made using this
information; however, this was the exceptional student, able to gather, synthesize and reach
informed decisions based on Web-based information. These findings are in line with research
conducted by Chudry, Foxall and Pallister (2011), who identified four debtor types and showing
a causal link between an individual’s attitude, subjective norms, and behavioral intentions.
Students Made their own Graduate Financial Aid Borrowing Decisions without Guidance
or Mentorship
Thirty-one participants told the researchers that they did not contact anyone when making
a decision about student loan borrowing. While over half of these students reported conducting
their own research, ten individuals stated they conducted little or no research. As identified in
research conducted by DesJardins and Toutkoushian (2005), student decision-making often
involves internal thought processes that can’t be observed, making it difficult to understand
student decision-making. While it is possible that the students in our study were responding to
information that they had gained through prior experiences, the study was unable to measure
DECISION-MAKING AND GRADUATE SCHOOL DEBT 119
participants existing knowledge of graduate borrowing and student debt. Future exploration of
this unspoken knowledge would be important to define.
This research study provided evidence that at least four individuals made graduate
borrowing decisions lacking information to make informed decisions. These students reported
they felt they had no other choice but to take the federal loan they were offered so they could
receive their degree as a required step in attaining their career goal. These students reported they
were just looking at the end result, obtaining a master’s degree or, they felt they did not have any
other options but to borrow. It is unclear if this behavior of not seeking information to make an
informed decision is due to ignorance, disinterest or the lack of social capital to support the
student’s decision-making. The students’ willingness to take on loans without fully
understanding the long-term consequences of repayment is a dangerous practice. This finding
supports Hwang, Liao and Huang’s (2013) findings that undergraduates were making the
decision to continue on to graduate school based on the perception they would not be able to
make a living wage with only a bachelor’s degree. These findings are in line with research that
has noted that students often misunderstand their financial aid packages and consistently
miscalculate their potential future earnings (Long, 2004; Burdman, 2005, Somers, Woodhouse &
Cofer, 2004; King, 2002; Warwick & Mansfield, 2000). Other researchers have found that
Latino students often experience difficulty accessing social networks that provide detailed and
accurate information about student financial aid (Gonzalez, Stoner & Jovel, 2003; O’Connor, et.
al., 2009).
Seeking advice through the PPCT lens.
Bronfenbrenner and Miller’s (1998) PPCT framework suggests that an individual’s
development and ecology is continually interactive, rather than a flat model focused on additive
effects of peer, family and environment. The theme and sub-themes explored in this section
DECISION-MAKING AND GRADUATE SCHOOL DEBT 120
specific to information seeking behaviors, using PPCT reveals factors that put students at-risk for
taking on excessive or inappropriate student debt, as well as prevention factors that assisted in
supporting students to understand and utilize resources that supported an optimum level of, and
access to, financial aid. The depth and breadth of information (personal contacts, financial aid
office, Web-based) that graduate students had available and relied on when making a decision
about graduate school debt was quite diverse. The continuum spans from the individual who did
not seek, or have access to peer support, to the student who accessed multiple sources of
information and developed detailed excel spreadsheets and projected future earnings to examine
financing options before making a decision. The student portraying optimum information
seeking behavior had personal experience and/or a spouse or family member who was
experienced in loans and borrowing and was able to conduct a comprehensive analysis of
borrowing and re-payment. The inexperienced student was more likely to be a first-generation
student without an experienced family member, mentor or friend they could confide in for
financial advice, and was more likely to accept the loan offered in pursuit of their goal to obtain
a master’s degree.
One critical factor shaping college debt decision-making is peer guidance and mentorship.
This sub-theme specifically focuses on student’s information seeking behavior. The PPCT
framework tells us that an individual’s development takes place through the processes of more
complex reciprocal interactions, between the individual and the persons, objects and symbols in
the external environment that occur over time. This study did not attempt to measure student’s
access to information over a longer period of time. Students were asked who they spoke with
when making a decision about paying for their graduate degree. Thus, we are not able to provide
evidence of information-seeking behavior that occurred prior to the students’ decision-making
related to a master’s degree unless the student volunteered that information.
DECISION-MAKING AND GRADUATE SCHOOL DEBT 121
Summary
Although there is not specific research related to post-baccalaureate student’s behavior in
seeking advice for graduate debt decision-making, this theme demonstrates that students are
unlikely to have access to optimum resources (family members, friends, mentors; financial aid
offices; Web-based resources) in making informed decisions about borrowing. The student
interviews provided a snapshot of student’s communications and information seeking behavior
around graduate student borrowing and debt decision-making. The study results suggest that
students spoke with few individuals about student loans and borrowing and were more apt to talk
with a trusted family member or friend with whom they could speak with confidentially, if such
a person existed. Students seemed to seek out individuals in their close circle of family and
friends who possessed the greatest knowledge about loans and federal financial aid. One might
expect that students would be more open about gathering information about borrowing and
paying for graduate school. This finding suggests that students are uncomfortable discussing
their own finances with people they do not know. What is not known, about this population, is if
their experience at the undergraduate level provided them with the information they needed to
make a decision or, if they were able to find adequate information to make a decision through
web-based resources.
In term of the influence of families, peers, and others, we again, heard many of the same
kinds of behaviors that might occur within undergraduate student populations. Study participants
shared stories of believing in the advice of siblings and friends. They also spoke of the heavy
influence of family members. Of course, we also heard examples of very strategic job and
certification pathways. Yet, even these stories were laced with an anxious “leap of faith”
approach to graduate school financing. It appears that student decision-making at the graduate
DECISION-MAKING AND GRADUATE SCHOOL DEBT 122
level has not significantly improved from behavior that has been studied at the undergraduate
level.
Return on Investment
A graduate degree represents an opportunity to advance knowledge, professional
prospects, and higher earning potential over the lifetime of the individual (Bowen & Bok, 1998;
Mullen et al., 2003; Zhang, 2005). The results of this study indicate that participants are willing
to incur debt to fund their graduate degree studies. Participants in this study described their debt
as an educational investment. This reveals that participants believe their educational investment
will result in a return on their investment. Seventy-four percent of the participants took out loans
to pay for their graduate degrees. Combined, they borrowed more than $3.9 million in student
loan debt. According to Avery and Turner (2012), graduate degree seeking students in 2009-
2010 incurred an excess of $31 billion in federal student loans to finance their living and
educational expenses. Student loan aid is important for graduate degree seeking individuals as
corroborated by this study.
Participants’ willingness to incur student loan debt stemmed from a belief that their
graduate education was an investment in their future. The participants viewed their student loans
as good debt that resulted in a return on their investment. Participants viewed career mobility and
institutional prestige as components of their return on investment. Further, participants in some
cases felt that the only option for advancement or to change a career was to enroll in graduate
school; the trade-off, therefore, was to incur student loan debt.
Career Mobility
Participants overwhelmingly responded that career mobility played a vital role in their
decision to pursue a graduate degree. Participants attending both private and public universities
perceived their graduate degree as having value and they viewed it as an integral component for
DECISION-MAKING AND GRADUATE SCHOOL DEBT 123
their upward mobility. Ninety-eight percent of the participants, regardless of educational field,
identified career mobility as a necessary tool critical to their ability to get promoted and move up
professionally. Hwang, Liao, and Huang (2013), stated that individuals sought graduate degrees
to make a living wage to support themselves and their families. These researchers also found that
individuals with graduate degrees faced increased competition for positions only requiring a
bachelor’s degree.
Results from this study indicate no variance in educational program (i.e. education,
business, or health sciences) with regards to career mobility. Participants in business, education,
and health sciences programs all felt that their graduate degree would provide them with the
necessary education, training, and skills to move up and earn more money. In particular, careers
in health sciences often require a master’s degree. Participants were willing to incur debt in
exchange for career mobility resulting in economic gains. There is economic evidence to suggest
that a graduate degree holds value. Research by the U.S. Bureau of Labor Statistics (2013)
suggests that individuals with graduate degrees have higher wages and lower unemployment. In
the current context, a graduate degree is seen as a possible next step by undergraduates who are
faced with low job prospects or underemployment.
Career mobility through the PPCT lens.
Participants stated that their graduate degree provided them the necessary skills that
would allow them to be hired or promoted within their current organization. The pursuit of their
degree allowed them to learn these necessary tools for career and professional mobility.
According to Bronfenbrenner’s PPCT model, this educational process is a primary mechanism of
development. The interaction of the individual and the educational micro-system facilitates the
development of the individual. For 74% of the participants in this study, this process was
important enough to incur educational debt.
DECISION-MAKING AND GRADUATE SCHOOL DEBT 124
The next element of the PPCT model, Person, takes into account the individual’s
characteristics. One of the characteristic types that Bronfenbrenner defines is “force
characteristics,” for example, motivation and persistence. The students in this study were
motivated by a desire to move up the professional ladder, and see obtaining a master’s degree as
a means for professional advancement. Seventy-four percent of the participants made the
decision to incur student loan debt to finance their master’s degree. Therefore, the force
characteristic of motivation drives the students to incur educational loan debt. This was the case
across all three fields of study.
Another component of PPCT involves Context, defined as the environments that the
student inhabits, which drive their development. Many participants live in a context of family
and work micro-systems. Career advancement within the work micro-system is seen as the
mechanism to improve the standard of living for their family. The meso-system created by the
interaction of these two micro-systems provides a context driving the motivation of the student to
pursue a master’s degree. This context, then influences student borrowing decisions.
The final component of PPCT involves Time. For some students, time was a factor as it
related to the family context, particularly with the choice to have children. Students choose to
return to school at this time because the anticipate changes in their family context in the future.
For example, students may choose to pursue a master’s degree prior to having children or getting
married. Alternatively, some chose to delay returning to graduate school until their children
reached a certain age, or they reached a certain point in their career where a master’s degree was
required for advancement. Participants valued their graduate degree depending on the stage they
were at in their lives. Students pursue a master’s degree once they reach the point in their lives
where the value of the master’s degree is worth the financial investment. In addition to career
DECISION-MAKING AND GRADUATE SCHOOL DEBT 125
mobility, the participants indicated that the their higher education institution’s reputation played
a role in their decision-making process.
Institutional Prestige
Thirty-four percent of all respondents identified institutional prestige as a factor in their
decision-making processes. These students chose to attend their institutions and justified the cost
of study based on the perceived impressiveness of their degree, the school’s position in national
rankings, and networking and job placement opportunities. Participants from one particular
private institution placed great emphasis on the prestige of their institution. These students were
willing to incur higher student loan debt to attend this private institution. In many, these students
selected this private institution over less expensive public institutions due to the institutional
prestige factor. Bronfenbrenner’s PPCT model is useful in providing a framework for analyzing
these findings.
Institutional prestige through the PPCT lens.
Fifty percent of the students who spoke of institutional prestige focused on its
impressiveness to others: how others would perceive them. In the PPCT model, Bronfenbrenner
(2005) defines demand characteristics as those individual characteristics that influence social
interactions, such as first impressions. Over time, participants developed an understanding of the
value of degrees from prestigious institutions within the context of the micro-systems of
professional networks and peer groups. For some students, interactions with family members
played an influential role in a student’s perception of institutional prestige. Within the context of
the family microsystem, family members provided students with explicit messages about the
worth of particular institutions, which then encouraged students to pursue degrees at these
schools, and accept the cost of attendance as an acceptable tradeoff to the prestige of the degree.
DECISION-MAKING AND GRADUATE SCHOOL DEBT 126
In addition to the professional, social, and family micro-systems, the macro-system of
national rankings influenced students’ borrowing decisions. Thirty-nine percent of participants
who spoke of institutional prestige stated that their school’s rank played a role in their decision-
making. For these students, national rankings were perceived as a trusted indicator of an
institution’s quality, and justified any amount of debt incurred to obtain a degree from a highly
ranked school.
The Person component of the PPCT model provides insight into individual differences in
disposition, resources, and characteristics that influence the decision-making processes of
graduate students. Only one-third of the graduate students mentioned institutional prestige as a
factor in their decision-making processes, and agreed that the prestige of their degrees
outweighed the financial cost of their programs. These students were more likely to carry higher
amounts of debt, indicating that they were less debt averse than their counterparts at other
institutions.
In addition, the Context component of the PPCT model can be used to analyze the
different influences within the public and private educational microsystems. Public and private
educational institutions are two separate contexts in which students made borrowing decisions.
Institutional prestige played a larger role in the decision-making processes of students at private
institutions, with 46% of private school students mentioning prestige as a factor, compared to
only 6% of students at public institutions. The students attending public institutions were less
likely to cite institutional prestige as a factor in their decision-making, valuing cost-effectiveness
and proximity to place of residence instead.
Context is also useful in understanding the job placement and networking benefits that
students expected to attain at prestigious institutions with a high cost of attendance. Almost one-
third of the students who spoke of institutional prestige felt that the prestige of their school
DECISION-MAKING AND GRADUATE SCHOOL DEBT 127
would assist them with job placement opportunities. Networking played a role in the decision-
making process of students, as they weighed the immediate and long-term opportunities that the
university’s network would provide. Approximately 25% of participants spoke of future career
opportunities that would result from networking at their university.
The final component of the PPCT model, Time, is helpful in understanding student
perceptions of institutional prestige. Students choosing to incur debt to attend prestigious, high-
cost universities, believe that the value of their degree will endure over time. Students spoke of
their prestigious universities as being historically, and permanently situated as respectable
institutions. They believed that the debt they incurred for their degrees was a worthwhile
investment that would continue to pay off in the future, through connections with powerful
alumni, job placement opportunities, and an affiliation with a reputable institution for the
remainder of their lives.
Summary
With any investment, there is risk involved. Students who chose to incur educational loan
debt are betting a solid return on their investments. However, several researchers have noted that
students often misunderstand and consistently miscalculate their own future earnings (Long
2004; Burdman 2005; Somers, Woodhouse, and Cofer 2004; King 2002; Warwick and Mansfield
2000). Seventy-four percent of the participant in this study reported incurring large amounts of
debt to fund their graduate studies; combined, this exceeds $3.9 million in student loan debt.
According to Cunningham and Keinzl (2011), households with student loan debt may have long-
term impact on their life choices and consumption patterns. However, participants in this study
were willing to incur debt to fund their graduate education regardless of future implications.
Participants consistently viewed their career mobility, networking, and institutional prestige as a
worthy return on their investment.
DECISION-MAKING AND GRADUATE SCHOOL DEBT 128
Implications for Practice
Implications for Institutions of Higher Education
Education for undergraduate students tends to be viewed as a public good, but education
for graduate students tends to be viewed as a private good. Since the burden of student loan
repayment is on the student, a reasonable institutional action could be to simply follow the basic
federal regulations. Financial aid offices may want to seek additional ways to help master’s level
students to make better student aid decisions. For example, finding ways to reiterate the
difference between cost of attendance and cost of tuition and fees could be a good way to deter
students from over borrowing. Emphasizing the purposes of educational loans might be another
meaningful reminder from the financial aid office.
Further, the current model that financial aid offices are using to communicate and
disseminate information to graduate students is not working. The financial aid offices on college
and university campuses need to consider new innovative processes and procedures to reach and
inform students about the financial aid process, student loans, budgeting, repayment options, and
debt. Perhaps this could help alleviate some of the stress, anxiety, and fear that some graduate
students experience in regard to borrowing and student loans.
Implications for Policymakers
Student loan debt outpacing credit card loan debt is problematic and warrants attention by
policymakers (Lewin, 2011). In addition, the ease of obtaining a student loan needs to be
addressed by policymakers (i.e. requiring annual in-person loan counseling to ensure students
understand the terms and conditions of their loans). Further, there is little attention at the state
and federal levels to support additional costs for master’s students. One might argue that the
current loan payment programs are a nod in their direction. Given that there is so much argument
and tension over the purchasing power and disbursement of the Pell Grant program, any
DECISION-MAKING AND GRADUATE SCHOOL DEBT 129
initiative to create grant programs for master’s level students is likely to fall on deaf political
ears. Perhaps a continued focus on reducing student loan interest rates might be the best way to
focus advocacy for master’s degree students. In addition, policymakers should explore
preserving and expanding repayment options (e.g. Public Service Loan Forgiveness).
Further, other sources of funding beyond student loans should be considered and
explored. Student loans should not be the only financial option federally to fund graduate
education. Maybe a workforce option that is available to all graduate students who are employed
can be explored. This option could require a certain amount of years of employment and have
certain pertinent parameters.
Future Research

The data gathered in this study provides insight into how master’s degree students make
decisions about incurring graduate school debt. While participants’ stories shed some light on the
national phenomenon of rising educational loan debt, the narratives also yield the need for
additional research to answer a variety of unanswered questions. The following
recommendations for future research were developed as an extension of the findings presented in
this study: recruiting strategies, the impact of media, students who chose not to attend graduate
school, fear of loans, and the impact of part-time vs. full-time status on academic performance.
Recruiting Strategies
Graduate institutions utilize various tools, resources, and information to recruit students
for their academic programs. For example, many students in this study shared that they visited
their school’s website to gain an understanding of their financial aid options. Future research
might involve a close analysis of several graduate school financial aid websites. A potential
research question could be: What financial aid information is provided to prospective students on
graduate school websites?
DECISION-MAKING AND GRADUATE SCHOOL DEBT 130
In addition, the results of this study indicate that the Public Service Loan Forgiveness
program was an important factor in the decision to assume graduate school debt for many
participants. Some interviewees shared that their graduate institution used the Public Service
Loan Forgiveness program as part of their recruiting strategy. Future research could be
conducted on this topic alone. Due to the fact that the Public Service Loan Forgiveness program
is a federal program, it is available throughout the country. A future research study could survey
graduate institutions around the country to determine which institutions utilize this program as a
means to recruit students. An analysis of graduate institution websites might also be conducted to
determine how many promote the Public Service Loan Forgiveness program to prospective
students. In addition to recruiting, assessing the impact of media on the rise of graduate debt
should be considered.
The Impact of Media
A second possible stream of research could focus on the media and its impact on students’
view of graduate debt. The media often sends mixed messages of educational loan debt. On one
hand, the media promotes a graduate degree as the gateway to success and the “American
Dream.” On the other hand, the media paints the picture of educational loan debt as a “necessary
evil.” This breeds fear and debt aversion in many prospective students. A closer look on how the
media impacts graduate student debt decisions could inform how institutions promote their
programs. This could also have an impact on those who have chosen not to attend graduate
school in order to avoid educational loan debt.
Students Who Decided Not to Attend
This study interviewed 116 graduate students who were currently enrolled in a master’s
degree program in education, business, or health sciences. Some of these students entered
graduate school without any undergraduate debt. Others entered with an average of $25,174 in
DECISION-MAKING AND GRADUATE SCHOOL DEBT 131
undergraduate loan debt. Seventy-four percent of all participants assumed graduate school loans
to finance their education. Despite taking on debt for graduate school, they still chose to attend.
Future research should be conducted to interview or survey college graduates who decided not to
attend graduate school. Interviewing those who chose not to attend graduate school would
provide a different perspective on graduate school debt. This information is important to
ascertain as it may uncover the reasons some chose not to attend graduate school. It would also
advise graduate institutions and policymakers on ways to encourage those who may otherwise be
hesitant to attend graduate school.
Fear of Loans
Many of the participants in this study mentioned having a fear of loans. They described
how loans made them feel “anxious,” “worried,” and “stressed.” A longitudinal study could be
conducted to follow a group of graduate students from their acceptance of graduate school loans
through the end of their repayment period. During this time, participants could discuss their level
of anxiety, worry, and stress about their loans. Results might inform how institutions and
policymakers educate students about their repayment options.
Part-time vs. Full-time Status and Academic Performance
To help finance their graduate education, six percent of participants took classes part-
time and worked while in graduate school. Recent research indicates that working while in
school could have a negative impact on academic performance for undergraduate students
(Burdman, 2005; Avery & Turner, 2012). The literature, however, does not address this same
topic for graduate students. Future research, therefore, could determine whether part-time
graduate students or graduate students who worked while in school had poor academic
performance as compared to their non-working or full-time counterparts. This is particularly
important considering that many master’s degree programs are aimed at working professionals.
DECISION-MAKING AND GRADUATE SCHOOL DEBT 132
Ultimately, the results of this study could educate students who were considering attending part-
time or taking on a job while enrolled in graduate school.
Summary
Although this study adds to our understanding of how graduate students make decisions
to incur educational loan debt, it concentrates solely on students attending master’s degree
programs in California within three academic areas of study. The recommendations for future
research described above should be conducted on a national scale using quantitative measures.
The results of these new research studies would provide a deeper understanding of graduate debt
decision-making and generate possible policy changes at the federal, state, and institutional
levels.
Conclusion
While previous research has focused mainly on undergraduate debt decision-making, this
study provides a starting point into an understanding of the decision-making process of graduate
students. Ultimately, this study attempted to answer the question: What influences students’
decisions about incurring graduate school debt? Utilizing a qualitative narrative approach, the
researchers collected individual stories of graduate debt decision-making from 116 currently
enrolled graduate students in business, education, or health sciences (the three most common
types of master’s degree programs). After an in-depth analysis of the data, results indicated three
predominate themes: (a) knowledge of borrowing and repayment; (b) advice-seeking behaviors;
and (c) return on investment.
The results of this study yielded three major conclusions. First, graduate students
generally lack adequate knowledge of borrowing and repayment. Second, while many students
indicated the Public Service Loan Forgiveness program as a reason to incur additional
educational loan debt, few were able to clearly articulate the details of the program. Finally, a
DECISION-MAKING AND GRADUATE SCHOOL DEBT 133
misconception about a master’s degree return on investment persisted among all three fields of
study: education, health sciences, and business. The following explains each of these major
conclusions.
Lack of Knowledge
Lack of participant knowledge about student loan borrowing and repayment as it relates
the ways in which students seek information about financial aid emerged as one of the major
outcomes of this study. Almost a quarter of the participants lacked an understanding of student
loan borrowing and 88% of the participants who borrowed student loans lacked knowledge of
loan repayment. Thirty percent of the participants sought information about student loans from
their institutional financial aid office while fifteen percent of the participants sought information
on their own through the Department of Education website. In total, only 45% of participants
sought information about student loans. Tying these findings together, it appears that students are
lacking the knowledge that they need to make informed decisions about borrowing student loans
to fund their graduate education. Less than half of the study participants sought information
about their student loans, and given the large number of participants who lacked an
understanding of loan repayment, even the students who sought information about their loans did
not get the information that they need.
As noted in the recommendations for practice, it seems clear that institutional financial
aid offices and the U.S. Department of Education need to do more to provide information to
graduate students about student loan debt and repayment. The information currently exists online,
particularly through the federal entrance loan counseling process, but it is clearly not being
provided to these students in a way that causes them to retain the information. All of the
participants in this study have bachelor’s degrees and are enrolled in master’s degree programs at
accredited California universities. It seems unlikely that the problem lies with the participants’
DECISION-MAKING AND GRADUATE SCHOOL DEBT 134
ability to comprehend this information. This suggests that much more needs to be done to
provide student loan information to these students in a way that would allow them to retain the
information and make informed decisions about incurring student loan debt for graduate
education. Changing current policy to reflect this approach could have a major impact on how
master’s degree students make decisions about educational loan debt.
Lack of Understanding of the Public Service Loan Forgiveness Program
A second major outcome in this study involved the Public Service Loan Forgiveness
program. Enacted in 2007, this program eliminates a borrower’s educational loan balance
(including principal and interest) after making 120 on-time loan payments while working full-
time in an approved public service field for ten years. In order to take advantage of this program,
however, borrowers would have to change their payment plan from a Standard Repayment Plan
(i.e. 10 years of payments) to an extended repayment plan (e.g. Income-Based or Income-
Contingent), which extends loan payments longer than 10 years. In addition, the “Employment
Certification for Public Service Loan Forgiveness (PSLF)” form must be completed to verify
qualifying employment.
Approximately 31% of participants indicated the Public Service Loan Forgiveness
(PSLF) program as an option to reduce their educational loans making it the most popular of all
options mentioned. Many of the participants also shared that their graduate program promoted
Public Service Loan Forgiveness as part of their recruitment efforts. Despite providing this
information, none of the participants explained any of important details about the program, such
as changing their repayment plan from a Standard Repayment Plan to an extended plan or
completing the required documentation after working full-time in an approved public service job.
The lack of understanding of the Public Service Loan Forgiveness program is troubling
given that many of the students chose to incur educational loan debt with the expectation that
DECISION-MAKING AND GRADUATE SCHOOL DEBT 135
most of it would be forgiven. Since this program is highly popular among master’s students in
the fields of education and health sciences in particular, it is reasonable to suggest that
policymakers and financial aid offices across the country need to change the manner in which the
details of the program are presented to prospective students.
Perception of Return on Investment
A final theme of this study relates to the value of a graduate degree and its perceived
return on investment. Many researchers have expressed their concern about the widespread level
of debt incurred by pursuing a graduate degree. Study after study has questioned the value of a
graduate degree in regards to the return on investment. According to Avery and Turner (2012),
students seeking a graduate degree in 2009-2010 incurred an excess of $31 billion in federal
student loans to fund their post-baccalaureate studies. Among their concerns is that debt burdens
have become unmanageable and have resulted in negative impacts on their consumption patterns.
Cunningham and Keinzl (2011) indicate that households with student loan debt may experience
long-term impacts on their life choices, consumption patterns, and quality of living.
The results of this study indicated participants believed that although they were incurring
debt, their graduate degree would result in a positive return on their investment. According to
The College Payoff 2009 study, conducted by the Georgetown University Center on Education
and the Workforce, students with graduate degrees can expect to earn $2.7 million over their
lifetime. This can help explain the high percentage of the participants that were willing to incur
various amounts of debt to fund their graduate degree studies as they expect to earn more in the
long run.
Participants overwhelmingly viewed career mobility, networking, and institutional
prestige as worthy factors that contributed to their return on investment. Participants consistently
described their debt as an educational investment and were willing to incur debt to fund their
DECISION-MAKING AND GRADUATE SCHOOL DEBT 136
graduate education regardless of future implications. Participants who chose to incur educational
loan debt are betting on a solid return on their investment despite the recovering economy and
current job prospects.
Final Thoughts
As graduate debt rates continue to mount nationwide, policymakers at the federal, state,
and institutional levels should ensure that borrowers are adequately informed about borrowing
options and the long-term impact of their borrowing decisions. Ultimately, this information could
have long-lasting financial implications for students. Furthermore, despite programs like the
Public Service Loan Forgiveness Program, few state, federal, and institutional resources are
allocated to financially support students’ pursuit of an advanced degree. Additional financial
resources, such as grants and scholarships, would benefit students who are pursing a master’s
degree by decreasing the amount of loan debt they otherwise might assume to finance their
education. Perhaps a continued focus on decreasing student loan rates might be an effective
starting point to assist the students in this study. Ultimately, additional research should be
conducted to further explore financial aid decision-making of master’s degree students. These
topics might include graduate program recruiting strategies, fear of loans, affect of the media on
student decision-making, and the impact of part-time enrollment on academic performance.
These topics should be explored using a national sample of graduate students. Those who chose
not to attend graduate school should be included in future research, as it is important to
determine whether student loan aversion was an important factor in their decision. The future
success of the American economy may hinge on the number of highly educated people in the
workforce. It is critical, therefore, to understand the impact of student loan debt as a potential
barrier to master’s education.
DECISION-MAKING AND GRADUATE SCHOOL DEBT 137
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Appendix A
Masters of Debt Interview Protocol

The purpose of this study is to gain a better understanding of the decisions that you have made
about paying for graduate school. The interview should take about an hour to complete.

Demographics
Age:
Gender:
Relationship Status:
Parental Status and number of children, if applicable:
Race/Ethnicity:
Parent’s education level:
Veteran Status:
Current city:

1. What master’s degree program are you currently enrolled in?

2. When did you begin and when do you expect to graduate?

3. What are your career goals?

4. Where did you go to undergrad?
a. What was your major?
b. Why did you choose it?

5. Describe your undergraduate experience with financial aid. Did you rely on the same
resources this time? Why or why not?

6. What is your current amount of outstanding educational loan debt from your
undergraduate work? Tell me about your understanding of financial aid and loan
indebtedness during that time.
a. How has your undergraduate student aid experience shaped your choices now?

7. Why did you choose to go graduate school at this time?
a. Did you apply to any other graduate schools or programs?
b. Why did you choose this school?

8. How does this degree fit into your next steps professionally?

DECISION-MAKING AND GRADUATE SCHOOL DEBT 151
9. How are you paying for this program? How were you able to secure this funding?

10. Please describe your decision-making process (i.e. Do you weigh pros and cons or
positives and negatives? Do you get advice from family and friends? Do you act on
impulse, a hunch or gut feeling? etc.)

11. Did you contact the financial aid office during your decision-making? If so, how did you
contact them and what kinds of information did you seek?

12. Who did you talk to when making the decision to take on debt for graduate school? What
did you talk about?

13. Are you a full time or part time student? Why did you decide to take courses at this pace?

14. Do you financially support anyone, besides yourself?
a. What are your living arrangements? (at home, with roommates/others etc.)
b. Do you pay or share bills with others? i.e. cell phone, utilities etc.

15. Do you work full time, part time, or as an intern or volunteer? How does this job,
connect to your master’s degree goals, if at all?

16. What is your current amount of outstanding educational loan debt from your current
degree, if any?

17. Are you borrowing student loans to cover expenses beyond tuition and fees? How did
you decide how much to borrow?

18. How long will it take to pay your loans off? Do you know if there are any ways to reduce
or change your loan payments?

19. Did other outstanding debt impact your borrowing decisions? Either to borrow or not to
borrow?

20. Have you looked at the average salary for someone in your proposed profession who has
a master’s degree?

21. Do you see yourself continuing with additional education? Like another Master’s,
Professional Degree or PhD? Why or why not?

22. If you were to give advice to your sibling or cousin who was considering your degree
program goals from a financial aid perspective, what would you tell them?

23. Are there other comments that you would like to share?

DECISION-MAKING AND GRADUATE SCHOOL DEBT 152
Appendix B
Author Contributions

A Note on Author Contributions
This dissertation was written as a collaborative process between all seven authors. Each
author contributed original writing for multiple sections in each chapter. In addition, each author
collected, coded, and interpreted data (i.e. 17-20 interviews each for a total of 116 interviews).
Finally, each author’s work was edited and re-written by the other authors as part of a
collaborative editing process. The following indicates specific contributions for each chapter.
Chapter One: Overview of the Study

Chapter one was developed as part of a collaborative research team. Each team member
contributed to different sections of the chapter under the direction of the dissertation advisor.
Kristan Venegas, the dissertation chair, developed the first two introductory pages. Luis Dorado
constructed the purpose and significance of the study. Isabel Morales wrote the statement of the
problem. Yamonte Cooper presented the main research question. Carin Kruetzer wrote the
section on the overview of the theoretical model. Michael Gotto completed the overview of the
methodology. Paul Dieken developed the definitions section of the chapter. All team members
read, reviewed and provided feedback on drafts of the chapter. Michael Gotto completed an
additional proofreading before the chapter was passed onto an external editor. During the second
round of writing, Yamonte Cooper reviewed and made changes. Carin Kruetzer completed the
final bibliography and Michael Gotto completed another edit of the document.
Chapter Two: Literature Review

Chapter two was developed as part of a collaborative research team. Each team member
contributed to different sections of the chapter under the direction of the dissertation advisor.
During the first round of writing, Luis Dorado developed the introduction to this chapter. Paul
DECISION-MAKING AND GRADUATE SCHOOL DEBT 153
Dieken and Kristan Venegas collaborated on the review of the literature; Dieken completed 80%
of the writing and analysis here. Isabel Morales wrote the section on theories related to financial
aid decision making. Carin Kruetzer wrote the section on the overview of the theoretical model.
Yamonte Cooper coordinated the section on specific subpopulations that will be considered
within this chapter. Michael Gotto developed the lead in to our discussion of methodology.
During the following rounds of writing, Paul Dieken and Isabel Morales, with assistance from
Carin Kruetzer and Kristan Venegas, focused on improvements related to the literature and
conceptual framework. Michael Gotto and Carin Kruetzer completed a final edit and review of
the bibliography.
Chapter Three: Methodology

Chapter three was developed as part of a collaborative research team. Each team member
contributed to different sections of the chapter under the direction of the dissertation advisor.
During the first round of writing, Luis Dorado developed the introduction to this chapter. Paul
Dieken developed the section, which connects the literature to the present study. Isabel Morales
wrote the sections on validity and instrumentation. Michael Gotto and Carin Kruetzer
collaborated on the parts of the chapter describing the study population, site, and analysis process.
Kristan Venegas also assisted with this section. Yamonte Cooper developed the section on
limitations. All team members read, reviewed and provided feedback on drafts of the chapter.
During the following rounds of writing, Luis Dorado took the lead on completing the majority of
changes in preparation for this version of the chapter. Michael Gotto and Carin Kruetzer
completed a final edit and review of the bibliography.
Chapter Four: Results and Analysis

Chapter four was developed as part of a collaborative research team. Each team member
DECISION-MAKING AND GRADUATE SCHOOL DEBT 154
contributed to different sections of the chapter under the direction of the dissertation advisor. The
introduction was written by Luis Dorado, Carin Kruetzer, and Isabel Morales. Paul Dieken wrote
the section on knowledge of borrowing and Michael Gotto wrote the section on knowledge of
repayment, which comprised the first theme. Carin Kruetzer wrote the section about seeking
advice, which became theme two. Yamonte Cooper wrote the section about career mobility,
Isabel Morales wrote the section about institutional prestige and networking, and Luis Dorado
wrote the section about return on investment, which comprised the third theme. The conclusion
was written by, Yamonte Cooper, Paul Dieken, and Michael Gotto.
Chapter Five: Discussion, Implications, and Recommendations

Chapter five was developed as part of a collaborative research team. Each team member
contributed to different sections of the chapter under the direction of the dissertation advisor. The
introduction was written by Isabel Morales. Paul Dieken wrote the discussion and implications of
the first theme. Cary Kruetzer wrote the discussion and implications of the second theme. Luis
Dorado and Isabel Morales wrote the discussion and implications of the third theme. Yamonte
Cooper wrote the section on implications for practice and policy. Michael Gotto wrote the
recommendations for future research and the conclusion.

Abstract (if available)

Abstract This qualitative study summarized the findings from interviews of 116 master’s degree students in the disciplines of business, education, and health sciences enrolled in California not‐for‐profit public or private universities. The researchers gathered data to answer the following research question: What influences students’ decisions about incurring graduate school debt? Bronfenbrenner's Bioecological Framework for Human Development of individual decision‐making was used to analyze the findings. The following themes emerged from the data: (a) knowledge of borrowing and repayment

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Creator Morales, Isabel J. (author)

Core Title Decision-making and graduate school debt: a focus on master's degree students

School Rossier School of Education

Degree Doctor of Education

Degree Program Education (Leadership)

Publication Date 03/31/2014

Defense Date 12/11/2013

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag Debt,Education,educational debt,financial aid,Higher education,masters degrees,OAI-PMH Harvest,student debt,student loans

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Advisor Venegas, Kristan M. (committee chair), Melguizo, Tatiana (committee member), Tierney, William G. (committee member)

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