Research in Higher Education

, Volume 59, Issue 3, pp 302–324 | Cite as

Costs on the Mind: The Influence of the Financial Burden of College on Academic Performance and Cognitive Functioning

  • Mesmin Destin
  • Ryan C. Svoboda


The current studies test the hypothesis that the financial burden of college can initiate a psychological process that has a negative influence on academic performance for students at selective colleges and universities. Prior studies linking high college costs and student loans to academic outcomes have not been grounded within relevant social psychological theory regarding how and when the financial burden of college can influence students’ psychological and cognitive processes. We test the hypothesis that the salient financial burden of college impairs students’ cognitive functioning, especially when it creates an identity conflict or perceived barrier to reaching a student’s desired financially successful future. First, we use longitudinal data from 28 selective colleges and universities to establish that students who accumulate student loan debt within these contexts are less likely to graduate from college because student loan debt predicts a decline in grades over time, even when controlling for factors related to socioeconomic status and prior achievement. Then, in an experiment, we advance research in this area with a direct, causal test of the proposed psychological process. An experimental manipulation that brings high college costs to mind impairs students’ cognitive functioning, but only when those thoughts create an identity conflict or a perceived barrier to reaching a student’s desired financially successful future.


Higher education Debt Identity Cognition Academic achievement 



The authors thank Claudia M. Haase, Simone Ispa-Landa, Terri J. Sabol, and Heather Schoenfeld for their helpful comments.


  1. Arbuckle, J. L. (1996). Full information estimation in the presence of incomplete data. In G. A. Marcoulides & R. E. Schumacker (Eds.), Advanced structural equation modeling: Issues and techniques (pp. 243–277). Mahwah, NJ: Lawrence Erlbaum Associates Inc.Google Scholar
  2. Asparouhov, T., & Muthén, B. (2006). Multilevel modeling of complex survey data: Proceedings of the American Statistical Association. Seattle, WA: American Statistical Association.Google Scholar
  3. Baum, S., Ma, J., & Payea, K. (2010). Education pays: The benefits of higher education for individuals and society (Trends in higher education). Washington, DC: The College Board.Google Scholar
  4. Benet-Martinez, V., & Haritatos, J. (2005). Bicultural identity integration (BII): Components and psychosocial antecedents. Journal of Personality, 73(4), 1015–1050.CrossRefGoogle Scholar
  5. Chan, R., Shum, D., Toulopoulou, T., & Chen, E. (2008). Assessment of executive functions: Review of instruments and identification of critical issues. Archives of Clinical Neuropsychology, 23(2), 201–216.CrossRefGoogle Scholar
  6. Chen, R., & DesJardins, S. L. (2008). Exploring the effects of financial aid on the gap in student dropout risks by income level. Research in Higher Education, 49(1), 1–18.CrossRefGoogle Scholar
  7. College Board. (2015). Tuition and fees and room and board over time.Google Scholar
  8. Confession #598. (2015, May). Retrieved from
  9. Destin, M., & Oyserman, D. (2010). Incentivizing education: Seeing schoolwork as an investment, not a chore. Journal of Experimental Social Psychology, 46(5), 846–849.CrossRefGoogle Scholar
  10. Dowd, A. C., & Coury, T. (2003). The effect of loans on the persistence and attainment of community college students. Research in Higher Education, 47(1), 33–62.CrossRefGoogle Scholar
  11. Dwyer, R. E., Hodson, R., & McCloud, L. (2013). Gender, debt, and dropping out of college. Gender and Society, 27(1), 30–55.CrossRefGoogle Scholar
  12. Dwyer, R. E., McCloud, L., & Hodson, R. (2012). Debt and graduation from American universities. Social Forces, 90(4), 1133–1155.CrossRefGoogle Scholar
  13. Elliot, W., & Lewis, M. (2013). Are student loans widening the wealth gap in America? It’s a question of equity. In K. S. Lawrence (Ed.), Assets and Education Initiative (AEDI). Lawrence: University of Kansas School of Social Welfare.Google Scholar
  14. Elliott, W., & Lewis, M. (2014). The student loan problem in America: It’s not enough to say, “students will eventually recover”. In K. S. Lawrence (Ed.), Assets and Education Initiative (AEDI). Lawrence: University of Kansas School of Social Welfare.Google Scholar
  15. Engle, R. W. (2002). Working memory capacity as executive attention. Current Directions in Psychological Science, 11(1), 19–23.CrossRefGoogle Scholar
  16. FRBNY. (2012). Quarterly report on household debt and credit (Microeconomic Studies). New York, NY: Federal Reserve Bank of New York Consumer Credit Panel/Equifax.Google Scholar
  17. Hu, L., & Bentler, P. M. (1999). Cutoff criteria for fit indexes in covariance structure analysis: Conventional criteria versus new alternatives. Structural Equation Modeling: A Multidisciplinary Journal, 6(1), 1–55.CrossRefGoogle Scholar
  18. Jackson, B. A., & Reynolds, J. R. (2013). The price of opportunity: Race, student loan debt, and college achievement. Sociological Inquiry, 83(3), 335–368.CrossRefGoogle Scholar
  19. John, E. P., Andrieu, S., Oescher, J., & Starkey, J. B. (1992). The influence of student aid on within-year persistence by traditional college-age students in four-year colleges. Research in Higher Education, 35(4), 455–480. doi: 10.1007/BF02496383.CrossRefGoogle Scholar
  20. Kim, D. (2007). The effect of loans on students’ degree attainment: Differences by student and institutional characteristics. Harvard Educational Review, 77(1), 64–100.CrossRefGoogle Scholar
  21. MacKinnon, D. P., Lockwood, C. M., & Williams, J. (2004). Confidence limits for the indirect effect: Distribution of the product and resampling methods. Multivariate Behavioral Research, 39(1), 99–128.CrossRefGoogle Scholar
  22. Mani, A., Mullainathan, S., Shafir, E., & Zhao, J. (2013). Poverty impedes cognitive function. Science, 341(6149), 976–980.CrossRefGoogle Scholar
  23. Markus, H. R., & Nurius, P. (1986). Possible selves. American Psychologist, 41(9), 954–969.CrossRefGoogle Scholar
  24. Massey, D. S., Charles, C. Z., Lundy, G., & Fischer, M. J. (2011). The source of the river: The social origins of freshmen at America’s selective colleges and universities. Princeton, NJ: Princeton University Press.Google Scholar
  25. McKinney, L., & Burridge, A. B. (2015). Helping or hindering? The effects of loans on community college student persistence. Research in Higher Education, 56(4), 299–324.CrossRefGoogle Scholar
  26. Muthén, L. K., & Muthén, B. O. (1998–2012). Mplus user’s guide (7th ed.). Los Angeles, CA: Muthén & Muthén.Google Scholar
  27. Oyserman, D., Bybee, D., & Terry, K. (2006). Possible selves and academic outcomes: How and when possible selves impel action. Journal of Personality and Social Psychology, 91(1), 188–204.CrossRefGoogle Scholar
  28. Oyserman, D., & Destin, M. (2010). Identity-based motivation: Implications for intervention. The Counseling Psychologist, 38(7), 1001–1043.CrossRefGoogle Scholar
  29. Oyserman, D., Destin, M., & Novin, S. (2015). The context-sensitive future self: Possible selves motivate in context, not otherwise. Self and Identity, 14(2), 1–16.CrossRefGoogle Scholar
  30. Paas, F., Tuovinen, J. E., Tabbers, H., & Gerven, P. W. M. V. (2003). Cognitive load measurement as a means to advance cognitive load theory. Educational Psychologist, 38(1), 63–71.CrossRefGoogle Scholar
  31. Pascarella, E. T., Pierson, C. T., Wolniak, G. C., & Terenzini, P. T. (2004). First-generation college students: Additional evidence on college experiences and outcomes. Journal of Higher Education, 75, 249–284.Google Scholar
  32. Phinney, J. S., Dennis, J., & Osorio, S. (2006). Reasons to attend college among ethnically diverse college students. Cultural Diversity and Ethnic Minority Psychology, 12(2), 347.CrossRefGoogle Scholar
  33. Richeson, J. A., & Trawalter, S. (2005). Why do interracial interactions impair executive function? A resource depletion account. Journal of Personality and Social Psychology, 88(6), 934–947.CrossRefGoogle Scholar
  34. Robb, C. A., Moody, B., & Abdel-Ghany, M. (2012). College student persistence to degree: The burden of debt. Journal of College Student Retention, 13(4), 431–456.CrossRefGoogle Scholar
  35. Rothstein, J., & Rouse, C. E. (2011). Constrained after college: Student loans and early-career occupational choices. Journal of Public Economics, 95(1–2), 149–163.CrossRefGoogle Scholar
  36. Schwarz, N., & Clore, G. L. (1983). Mood, misattribution, and judgments of well-being: Informative and directive functions of affective states. Journal of Personality and Social Psychology, 45(3), 513.CrossRefGoogle Scholar
  37. Schwarz, N., & Clore, G. L. (2003). Mood as information: 20 years later. Psychological Inquiry, 14(3–4), 296–303.CrossRefGoogle Scholar
  38. Selig, J. P., & Preacher, K. J. (2009). Mediation models for longitudinal data in developmental research. Research in Human Development, 6(2–3), 144–164.CrossRefGoogle Scholar
  39. Settles, I. H. (2004). When multiple identities interfere: The role of identity centrality. Personality and Social Psychology Bulletin, 30(4), 487–500.CrossRefGoogle Scholar
  40. Shah, A. K., Mullainathan, S., & Shafir, E. (2012). Some consequences of having too little. Science, 338(6107), 682–685.CrossRefGoogle Scholar
  41. Stephens, N. M., Hamedani, M., & Destin, M. (2014). Navigating the social class divide: A diversity education intervention improves first-generation students’ academic performance and all students’ college transition. Psychological Science, 25(4), 943–953.CrossRefGoogle Scholar
  42. Stroop, J. R. (1935). Studies of interference in serial verbal reactions. Journal of Experimental Psychology, 18(6), 643–662.CrossRefGoogle Scholar
  43. Sussman, A. B., & Shafir, E. (2012). On assets and debt in the psychology of perceived wealth. Psychological Science, 23(1), 101–108.CrossRefGoogle Scholar
  44. Yeager, D. S., Henderson, M. D., Paunesku, D., Walton, G. M., D’Mello, S., Spitzer, B. J., et al. (2015). Boring but important: A self-transcendent purpose for learning fosters academic self-regulation. Journal of Personality and Social Psychology, 107(4), 559–580.CrossRefGoogle Scholar
  45. Zhang, J., & Kemp, S. (2009). The relationships between student debt and motivation, happiness, and academic achievement. New Zealand Journal of Psychology, 38(2), 24–29.Google Scholar

Copyright information

© Springer Science+Business Media, LLC 2017

Authors and Affiliations

  1. 1.Department of Psychology, School of Education & Social Policy, Institute for Policy ResearchNorthwestern UniversityEvanstonUSA
  2. 2.School of Education & Social PolicyNorthwestern UniversityEvanstonUSA

Personalised recommendations