Fourthly, we confirm the relevance of attitudes towards debt when analysing higher education choices in England. A 1 standard deviation rise in debt aversion is associated with a 2.4 percentage point reduction in the probability of loan take-up, effecting the take up of both maintenance and tuition fee loans. Albeit modest in size, this finding has implications for social mobility. As other research shows, debt aversion is greatest among low-income students and is related to decisions to enter higher education and the choice of university (Callender and Jackson 2008; Callender and Mason 2017).
Fifthly, living at home while studying is a significant debt avoidance mechanism but, consistent with earlier studies, working in term-time is not. Living at home is more strongly linked with lower maintenance loan take-up than with lower tuition fee loan take-up (27% compared with 15%). The proportion of commuter students in the UK has been quite stable at about 20% since the 1990s (Malcolm 2015), despite rises in tuition fees in all countries but Scotland. Any increases in students living at home have been localised and linked to ethnicity, religion, and social background, whereby tuition fee rises and the ensuing debt might adversely affect the mobility of certain subgroups who tend to be already disadvantaged (Donnelly and Gamsu 2018). Living at home as a debt avoidance mechanism is problematic because it limits students’ choice of institution to one within commuting distance of their home. Moreover, on graduation, younger students living at home tend to remain in their locality, rarely operating in a national graduate labour market, and are often confined to local often lower paying jobs (Purcell et al. 2012).
Specifically, students of Indian origin are 11.7 percentage points less likely to take out maintenance loans, with this effect becoming smaller and statistically insignificant once we control for whether the student was living at home. And Muslim students are 9.7% less likely to take out a tuition fee loan, and 18.5% less likely to borrow for maintenance. Again, both these effects are much smaller and insignificant when accounting for living at home.
Conclusion
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Understanding who does and does not take out student loans is important, because those who manage to study without borrowing enjoy significant advantages both during and after their studies. These advantages span the financial realm, and spill over to academic achievements and societal milestones: having student loans is linked to lower probabilities of graduating, having a family, buying a house and saving for retirement (de Gayardon et al. 2018). Thus, student loan take-up has potential implications for policies on educational inequality and social mobility.
While take-up is surprisingly broad across the income and social spectrum, it remains the case that wealth and permanent income are significant factors, creating social mobility issues. Similarly, gender, ethnicity and religion might impede educational achievements for those deterred by debt. Finally, the role of parental education and living at home in encouraging or inhibiting geographic mobility for higher education might also influence social mobility.
Our findings focus on England but could be relevant for other countries with extensive student loans systems, such as the US or the Netherlands (National Center for Education Statistics 2015; van den Broek et al. 2018). These findings highlight a contradiction between the increased popularity of student loans globally and rising concerns in many countries about equity in higher education. As we show, whether student loans and equity can coexist is yet to be determined.
Introduction
More students in England are taking out student loans, to pay for their tuition fees and/or for living costs and are taking out larger loans.
