Loans are a central component of college finance, yet research has generated a dearth of strong evidence of their effect on student choices. This article examines challenges to causal modeling regarding the effects of borrowing and the prospects of indebtedness on students' college-going behaviors. Statistical estimates of causal effects are confounded by dynamic interactions between the decision to borrow and the characteristics of borrowers (endogeneity), their degree and earnings expectations (self-selection bias), and cumulative debt (temporal and threshold effects). Furthermore, interpretive research illustrates that college counseling is highly intersubjective, with application and financial aid advice predicated on perceptions of student socioeconomic class and degree prospects. These studies indicate the need for an interdisciplinary research agenda more inclusive of sociopsychological perspectives.
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