Comparing high school students' attitudes towards borrowing for higher education in England and the United States: Who are the most loan averse?

Student borrowing is a major higher education public policy issue, with students in both England and the United States increasingly relying on loans to finance postsecondary education. Our paper examines prospective higher education students' attitudes towards debt in England and the United States. It exploits a unique dataset which allows us to compare students' responses to similar surveys conducted in both countries during the same time period. Our study is the first of its kind to explore how students' borrowing attitudes differ across the two countries. It confirms widespread loan aversion among prospective higher education students in both countries. But students in the United States are more debt averse than their peers in England. These debt averse attitudes also predict lower intentions to pursue higher education, potentially exacerbating existing inequalities in access. We consider how these attitudes to borrowing are likely shaped by each country's distinctive student loan system. We conclude that the design of loans matters. England's income-contingent loan repayments, in contrast to North America's mortgage style repayments, make borrowing less risky and reduce the impact of loan aversion on participation decisions, while borrowing is more common, and the system less complicated, in England. Thus, there are lessons for other countries considering introducing student loans or reforming their provision. We contribute to the extant literature on the determinants of, and socioeconomic differences in, higher education participation and the overlooked role of student debt aversion.