The effect of Pell Grants and other factors on debt accumulation of Stafford Loan recipients

Graduation date: 2005The purpose of the present study was to investigate the effect that Pell Grants\ud have on Stafford Loan debt accumulation and to identify other factors that affect\ud Stafford Loan debt accumulation.\ud The sample consisted of 32,525 dependent undergraduate students from more\ud than 100 different four-year public institutions. All the students received Stafford\ud Loans but only a portion of these students received federal Pell Grants.\ud There were eight socio-demographic variables used in the regression analysis\ud equation to explain accumulated Stafford Loan debt of dependent undergraduate\ud students.\ud The association between Stafford Loans and Pell Grants was significant. The\ud direction was positive meaning that the fact of receiving a grant was not associated\ud with lower levels of accumulated debt but, in fact, seemed to be related to increased\ud levels of debt. The study also identified other factors influencing accumulated student\ud debt. Age of the student, and price of tuition and fees were related to higher debt \ud levels. Non-tuition financial support by parents, and level of student earnings were\ud negatively associated with Stafford Loan debt accumulation.\ud Gender, Race/Ethnicity, and Number of Credit Cards with a Debt Balance\ud were not related to the level of debt accumulation at a .05 level of significance