Understanding Loan Aversion in Education: Evidence from High School Seniors, Community College Students, and Adults. CEPA Working Paper No. 16-15

Student loans are a crucial aspect of financing a college education for millions of Americans, yet we have surprisingly little empirical evidence concerning individuals' unwillingness to borrow money for educational purposes. This study provides the first large-scale quantitative evidence of levels of loan aversion in the United States. Using survey data collected on more than 6,000 individuals, we examine the frequency of loan aversion in three distinct populations. Depending on the measure, between 20 to 40 percent of high school seniors exhibit loan aversion with lower rates among community college students and adults not in college. Women are less likely to express loan averse attitudes than men, and Hispanic respondents are more likely to be loan averse than white respondents.