Does Financial Satisfaction Vary Depending on the Funding Strategy Used to Pay for College?

Robin Henager, Sophia T. Anong, Joyce Serido, Soyeon Shim

Research output: Contribution to journalArticlepeer-review


This study sought to determine whether the levels of financial satisfaction reported by college undergraduates and graduates differ in relation to whether they funded their college education by working or borrowing or a combination of the two. Data for this study came from a survey sample of full-time freshmen that formed the basis of a longitudinal study conducted at a large public university. Funding sources examined were grouped into those who worked only, those who borrowed only, those who worked and borrowed, and those who used grants, scholarships, or other sources of money to fund their college education. Compared to those who had student loans, those who had financed college with grants, scholarships, or other money (usually from family and/or friends) were more likely to report greater financial satisfaction than those who had used student loans to pay for college. There was evidence that this was only true during college rather than after college. The results obtained suggest that merely possessing a student loan may not necessarily decrease the level of financial satisfaction as many suspect, especially considering other funding alternatives such as working during college. While there was no significant impact of these funding strategies on financial satisfaction either during or after college, there was evidence for possible thresholds at which overall student loan balances may begin to erode financial satisfaction. The results obtained suggest that student loans may not decrease the level of financial satisfaction as much as many have suspected when compared with working to pay for college, as long as the amount of the student loan is not excessive, and is not accompanied by other types of debt (which also reduced financial satisfaction).

Original languageEnglish (US)
Pages (from-to)429-448
Number of pages20
JournalJournal of Family and Economic Issues
Issue number3
StatePublished - Feb 17 2021

Bibliographical note

Funding Information:
Column 2 shows that while the additional variable shows a highly significant negative association with financial satisfaction, none of the funding strategies continued to have influence. A new threshold of the negative impact of higher loan balances ranging from $3,001 to $4,000 became significant with a higher magnitude for the coefficient than for the insignificant one in Column 1. Meanwhile, the effect of balances between $4,000 and $10,000 decreased marginally both in the size of the coefficient and level of significance. Without factoring in average economic decline, there was only partial support, much like the findings from the first wave, that those whose funding strategies did not involve work or combining work with loans, were more likely to perceive greater financial satisfaction. However, there is no support for funding strategies hypotheses in the robust estimation and only hypothesis 4 on the effect of loan balances was supported.

Funding Information:
Dr. Henager and Dr. Anong would like to acknowledge and thank Dr. Serido and Dr. Shim for their dedication to encourage rising scholars in research and collaboration in the dissemination of studies using the APLUS data. Partial funding for the study provided by School of Human Ecology, University of Wisconsin-Madison. Funding for data collection provided by the National Endowment for Financial Education and Great Lakes Higher Education Corporation & Affiliates.

Publisher Copyright:
© 2021, The Author(s), under exclusive licence to Springer Science+Business Media, LLC part of Springer Nature.


  • College employment
  • Financial satisfaction
  • Student loans


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