Literature Review #3

Visual: 

Citation: 

DiMaria, F. (2004, Jan 26). Student loans: Perceptions and realities. The Hispanic Outlook in Higher Education, 14, 33. Retrieved from http://search.proquest.com/docview/219290950?accountid=13626

Summary: 

The article begins by explaining that it is analyzing two surveys on debt. It continues to state that the vast majority of students believe they could not have gone to college without loans. The following section is about the average debt of students by the time they finished their secondary and postsecondary education. The next section is about the results of a survey studying how the percentage of income dedicated to paying student debt impacts an individual’s financial discomfort. The article then goes on to discuss credit card debt and its additional impact on paying off student loans. The following section is about the surveyed individuals’ opinions on their loans and how worth it they were. Even though there appears to be a correlation between high payment-income ratios and later home ownership, they state that this is due to age. 

Author: 
Frank DiMaria writes for, The Hispanic Outlook in Higher Education, a journal that is mainly focused on the Hispanic perspective in higher education. He has published many articles on the subject for them.

Key terms:
payment-to-income ratios - the percentage of income that is dedicated to paying student loans
perceived burden - how difficult paying back loans the borrower considers making payments to be

Quotes:
"What we tried to do in the report is determine at what percent of your income do you feel an increased level of burden. At 2 percent to 7 percent the burden was about the same. But when you get to 8 percent, that's sort of a break point, then around the 12 percent point you start to feel that sort of next level of impact. And then again around 17 percent, then we did 20 percent or greater,"
This escalation of income being drained into student loans shows how the increase in percentage of income impacts the individual on a personal level. The fact that student loans could even reach 20 percent of an individual's income shows how drastically student debt can affect borrowers.

"O'Malley says that one must also consider a graduate's additional debt and income level. Graduates, she says, could probably comfortably spend 20 percent of their income on student loan debt if they are "living at home with mom and dad, not paying them any rent and they're buying the food, and you don't have any car payments. For those who have incurred a large amount of debt above their student loan debt, whether during their years in school or after graduation, "the student loan payment begins to interfere more with your lifestyle and other payments because in some people's minds it represents something that's getting in the way of being able to spend on something else.""
This statement shows that on the high end of payments, the only good way to allocate that much money to student loans is to not move out from their parents' house. This is not an option for many, and prevents heavy borrowers from establishing themselves in a residence of their own immediately after graduation.

"Forty-one percent who did not receive debt counseling were less likely to feel that borrowing had been worthwhile than the others, with 26 percent of those who had not been counseled about debt indicating it was not worth borrowing to increase career opportunities, compared to 14 percent of the others."
This supports my theory that education about borrowing and loan management are important influences on the borrower's experience with loans.

Value: This article presents the opinions of many individuals on how loans have affected them, giving data from the borrowers instead of just about them. This information also gives me evidence for my theory about proper education about student loans being important for responsible decision making on loans.