Institutional determinants of American undergraduate student debt

Between 2005 and 2013, student loan debt in the US increased at a rate of 13.3 per cent per annum. This rise in collegiate student debt has become the focus of any number of new proposals and policies at both the state and national levels. While considering broad policies to stem this rising tide are admirable, they do little to help a graduating high school student interested in minimising their debt level choose between competing institutions of higher learning. In this paper, we analyse the institutional characteristics that result in students assuming higher debt levels. We use a data set compiled from the 2011 Integrated Postsecondary Education Data System and supplement from a variety of sources with additional institutional characteristics such as location and weather to investigate this question. After controlling for the cost of attending the institution, we find that requiring higher standardised test scores on entrance exams and being located in less urban areas result in lower average debt by graduates. Additionally, we identify a non-linear relationship between the income levels of students’ families and the debt with which they graduate, with middle-income students and families being the most heavily burdened by debt.