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SCE Celebration

Debt Diagnostics

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April 19, 2017
Next semester, Alex Smith ’17, will be starting a master’s in accounting at the College of William and Mary. But first, he used his Senior Capstone Experience to take a hard look at student loan debt.

The business management and economics double major’s SCE is titled The Burden of Student Loan Debt: How Student Loan Debt Affects Future Consumption. He wanted to explore the way student loan debt will effect the financial decisions of himself and his peers like purchasing property, having children, or pursuing further education.

At first, Smith, a captain of the Sailing Team and president of the Theta Chi fraternity, was wary of the early deadlines set by the Department of Economics, which requires its students to begin their thesis process in the spring of junior year. By senior year, he said, “I had most of my sources already. The only thing I really had to do was write. I made it my goal to spend the whole summer writing my first chapter.”

In the end, he appreciated being able to finish the SCE process ahead of many of his peers thanks to the deadlines. “Most departments don’t do that, and at first I thought it was crazy, but now I think it was the best thing ever.”

Like any good economist, Smith’s found his passion sparked by data. “From 2000 to 2015 the percentage of people in a household with a bachelor’s degree increased more than 40 percent,” he said, of his early findings. “At the same time, there was a sharp decline of net worth of people having some college, or a bachelor’s or master’s level of education.”

This stirred him and prompted him to look into the ways that this kind of information might affect behavior for college students.

In his research, he found a survey that polled 14,000 students for their perceptions on the benefits and dangers of student debt. He created a similar one on a smaller scale, which he distributed to his WC peers. “About 200 students took it, which for a survey here, is pretty good,” he said.

He found that overall students accepted student loans as an inevitable part of college. But within business and economics majors, he found that their extra education on loans changed their responses to the survey questions.

Smith said, “They perceive the cost of debt as being greater than the perceived benefit. So their exposure through the courses they take enlightens them about the true effects of debt.”

His passion for the data didn’t wane even toward the end of the process. While writing his fourth and final chapter, he began researching the effects of loan repayment and how it might affect a future financial crisis. He discovered that groups of students that were predicted to only have 10 percent of their debt level had close to 62 percent remaining. He said, “Had I found that first I totally would’ve ditched the other stuff because it was way more interesting.”


Last modified on Apr. 19th at 1:56pm by Meghan Livie.