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Crucial Choices:

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Working: Penny Wise and Pound Foolish? Dick works 25 hours per week, takes 5 years to graduate. ... Working: Penny Wise and Pound Foolish? ... – PowerPoint PPT presentation

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Title: Crucial Choices:


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Crucial Choices How Students Financial
Decisions Affect Their Academic
Success Jacqueline E. King October 31, 2005
3
Beginning Postsecondary Students National
Longitudinal Study
  • Produced by the U.S. Department of Education
    National Center for Education Statistics.
  • Nationally-representative sample of 9,000 1995-96
    first-time students, followed up in 1998 and
    2001.
  • Tracks persistence across institutions.

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Income Groups Studied
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Background Characteristics
Low-income Middle- and Upper-income (up to 150
of poverty) (300 of poverty or more)
  • 32 of beginning students 41 of beginning
    students
  • 53 dependent 90 dependent
  • (34 independent w/ dependents)
  • 60 female 50 female
  • 48 non-white 20 non-white
  • 44 age 20 or older 15 age 20 or older
  • 35 married and/or w/ kids 7 married and/or
    w/kids

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Academic Background
Low-income Middle-and Upper-income (up to 150
of poverty) (300 of poverty or more)
  • 64 first-generation 33 first-generation
  • 13 alternative diploma 3 alternative diploma
  • 5 no high school diploma 2 no high school
    diploma
  • 56 delayed college entry 23 delayed college
    entry

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Academic Preparation
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Institution Choices
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Financing Choices
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Attendance Choices
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Average Unmet Need
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Employment Choices
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Choices and Persistence
Middle- and Upper-income (75)
Low-income (63)
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Work and Borrowing Choices
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Work and Borrowing Choices
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Working Penny Wise and Pound Foolish?
  • Dick works 25 hours per week, takes 5 years to
    graduate.
  • Year 5 Income (25 hrs/week _at_ 7.50 summer work)
    10,800
  • Cost of an extra year in college (educational
    expenses only) 5,000
  • Net gain 5,800

17
Working Penny Wise and Pound Foolish?
  • Jane borrows and works 15 hours per week, takes 4
    years to graduate.
  • Year 5 Income as a graduate 30,000
  • Total cost of loan
  • (borrowed 10k to work 15 hours per week at 7.25
    interest with 10 year repayment) 14,100
  • Net gain 15,900

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Worksheet for Dick
Reflects 25 hours/week for 32 weeks and 40
hours/week for 16 weeks.
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Worksheet for Jane
Reflects 10 hours/week for 32 week over 4
years. Based on a 7.25 interest rate and
standard 10-year repayment plan.
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Conclusions
  • Full-time attendance and part-time work are the
    surest path to a degree.
  • Borrowing can be a productive way to finance
    full-time attendance and part-time work.
  • Low-income students who borrow and work part time
    persist at high rates.
  • Even middle-income students choose to work and
    avoid student loans.

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Recommendations
  • Integrate academic and financial advising.
  • Help students see the long-term academic and
    financial implications of their choices.
  • Increase grant funding for low-income
    students--especially who borrow and work.
  • Teach students about personal finance.
  • There is no one-size-fits-all solution.

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