Financial distress can hinder success of academically prepared minority students

http://www.eurekalert.org/pub_releases/2015-09/uoc-fdc090915.php

Public Release: 10-Sep-2015
Financial distress can hinder success of academically prepared minority students
University of Chicago

A new study of more than 500 Black and Latino college students has confirmed that many encounter obstacles after enrolling in college without adequate financial resources.

"Students were surveyed in the fall, winter and spring of freshman year," said Micere Keels, associate professor in comparative human development at the University of Chicago, who led the study. "At each time-point, approximately 35 percent reported having difficulty paying their bills, being upset that they did not have enough money and being concerned that they would not be able to afford to complete their degree."

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Students who started college with a high level of financial distress fell into one of three groups. The first group is students who enrolled knowing there was an unmet need that would have to be paid for out of pocket, but hoped that somehow they could find a way to pay it before a hold was placed on their account.

The second group is students who enrolled believing there was no unmet need but the final amount of aid received was lower than expected, or made housing or other changes without realizing that it would create unmet need.

The third group is students who, because of limited financial knowledge, believed that financial aid would cover everything and did not budget for living expenses such as food and activity fees. For students without access to any additional credit, from family or banks, incidental expenses add up and lead to stopping-out.

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"This project focuses on Black and Latino students because while there has been substantial narrowing of racial and ethnic gaps in college enrollment, there has been no narrowing of the number that matters most--persistence through to degree attainment," Keels said. Consequently, disproportionate numbers of Blacks and Latinos are entering adulthood with college debt but without a degree.

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Nationally, approximately 40 percent of Black and 52 percent of Latino freshmen obtain their degree within six years, compared to 63 percent of White and 70 percent of Asian students. Black and Latino students also have significantly more student debt than White and Asian students. For example, approximately 43 percent of Black and 30 percent of Latino graduates have more than $30,500 in student debt, compared to 25 percent of White and 10 percent of Asian students. Consequently, broadening access without increasing persistence disproportionately harms Black and Latino students.

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