Financial knowledge and student loan usage in college students

Abstract

The purpose of this study is to examine the level of knowledge students have pertaining to student loans. College tuition has increased over time. Consequently, the number of students requiring financial aid in the form of student loans has increased. This study measures the level of knowledge students have about these loans to assess whether or not financial knowledge and other demographic information predicts the level of student loan debt. The results indicate that students in a later year in school and students with lower grade point averages are more likely to have higher student loan debt levels. Additionally, the results indicate that in-state students have a lower probability of having higher loan values. Race is also a predictor of student loan debt levels. African American students are more likely to have higher levels of student loan debt than other races. Higher levels of credit-card debt and financial independence are also related to higher levels of student loans.