Building a Model to Test the Relationship Between Higher Education Spending and Student Debt

The rising cost of tuition and fees is no doubt a major contributor to rising student debt but it is certainly not the only factor. The amount of debt with which students may graduate can largely be a function of the type of institution they attend (Monks, 2014). There is a dearth of research that focuses on the institutional factors that relate to student debt consumption (Craig and Raisanen, 2014; Macy and Terry, 2007).

Prior studies have shown that the amount of expenditures and the area in which an institution spends their money can impact salient student outcomes This quantitative dissertation sought to examine institutional expenditures within higher education and their possible relationship to student debt through a fixed-effects analysis that used data across a six-year period. This study examined public comprehensive master's level institutions as defined by the Carnegie Classification system. This institutional type has been overlooked within higher education research (Henderson, 2007). In short, this dissertation sought to investigate the relationship between spending within the public comprehensive master's level institution and average annual federal student loan use.

This study found that there was a modest negative relationship between spending on research and academic support and student loan consumption. Spending on operation of maintenance and plant was positively related to student loan consumption. This dissertation further found that the number of students receiving the Pell grant, the percent of students that identify as Hispanic and the number of full-time equivalent (FTE) students were statistically significant regarding their student loan use. The percent of students receiving the Pell grant within an institution related to higher levels of student debt. The percent of students that identify as Hispanic and the number of FTEs were related to lower average levels of student debt. This study has implications for policymakers and administrators pursuing factors that reduce student loan usage and gives insight into the impacts of institutional spending. These findings also have implications for future research that explores not only institutional spending and student outcomes but also how spending may impact institutional mission and the composition of a student body.