When Average Is Not Enough: A Case Study Examining the Variation in the Influences on Undergraduate Debt Burden

In an era of increased accountability for colleges and concerns about an affordable education, it is useful to understand whether students can adequately manage the debt burden they hold after leaving higher education. In 2015, Texas called for cumulative undergraduate debt to be 60% or less of public institution graduates’ first-year earnings by 2030. I investigate the student-level characteristics that are associated with a debt-to-income ratio above 60%. The data come from five cohorts of undergraduate students who attended Texas public 4-year institutions. I find that if sanctions were attached to the cumulative debt goal, historically disadvantaged groups of students and institutions that serve these students likely would be disproportionately affected by this type of accountability goal even after controlling for prior income, parental education, major choice, and time to degree. Policy implications are discussed.