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How Student Loans Can Help Students

How Student Loans Can Help Students . / Credit: Loans Image via Shutterstock

Student loans not only help students pay for college, but new research has found they also help  encourage them to graduate. Researchers found that taking out student loans made graduation more likely for all students.

Though loans help motivate all students to graduate, researchers found women were more likely than men to graduate after taking out student loans. The researchers say that several factors influence those findings. Women are more motivated to graduate than men because their job prospects are worse after graduation, the research found.   

"At least early in their careers, women suffer more than men if they don’t have a college degree," said Rachel Dwyer, co-author of the study and associate professor of sociology at Ohio State University. "Women will go deeper in debt to finance college because they need the degree more than men if they want to earn a good living. Men will drop out at lower levels of debt."

Results found that men who dropped out of college had similar earnings to men who graduated from college early in their careers. However, women who dropped out earned $6,500 less on average than women who graduated. This may also explain why men are able to drop out of school with fewer consequences, since men typically have job opportunities in industries that are not as open to women, such as construction and manufacturing. 

"Men may drop out at lower levels of debt than women because they have better job prospects than women do without a college degree," said Dwyer, who conducted the research with Randy Hodson, professor of sociology at Ohio State University and Laura McCloud, assistant professor of sociology at Pacific Lutheran University.

Dwyer said that the decision to drop out can be very short-sighted since college graduates earn more in the long run.  In fact, male college graduates had a salary $20,000 higher than nongraduates by midlife, the researchers found.

The research, which was based on the responses of 3,676 Americans who participated in the National Longitudinal Survey of Youth 1997, also found that levels of debt affect men and women differently. Men began having diminishing graduation probability when they accrued just more than $12,000 in loans, while women saw those same returns when loans hit $14,000.

The National Longitudinal Survey of Youth 1997 examined young Americans between the age of 13 and 17 when it was conducted in 1997 and checked in with those same people each year up until 2011. The research appears in the February issue of the journal Gender and Society. 

Follow David Mielach on Twitter @D_M89 or BusinessNewsDaily @bndarticles. We're also on Facebook & Google+.