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State-Adopted Credit Hour Policies Associated with Increases
in Student Debt but Not Graduation Rates

WASHINGTON, D.C., July 20 — State-adopted policies designed to encourage students to graduate on time are ineffective in improving time-to-degree, while being associated with growing median student loan debt for low- and middle-income students, according to new research published today in Educational Evaluation and Policy Analysis, a peer-reviewed journal of the American Educational Research Association.

As a way to fight the increasing length of time students take to complete their bachelor’s degrees, a growing number of states have passed laws intended to discourage students at public colleges and universities from taking more credits than necessary to graduate.

Excess credit hour (ECH) policies assess a tuition surcharge for credits taken beyond a predetermined threshold, usually between 115 percent and 130 percent of a degree’s typical required credits, and are currently in place in nine states (see table at the end of this release).

The study, by Dennis A. Kramer II and undergraduate research associate Michael R. Holcomb, both of the University of Florida, and Robert Kelchen, of Seton Hall University, used data from the U.S. Department of Education, the Bureau of Labor Statistics, and the National Conference of State Legislatures to estimate the effect of ECH policy adoption on institution graduation rates and student debt burdens four to six years after policy adoption. The researchers controlled for institutional factors and state-level economic and political conditions that can also impact graduation and student debt outcomes. Data over 14 years (2000-2013) from all public four-year institutions in the United States were examined.    

The researchers found no significant relationship between the adoption of an ECH policy and an institution’s overall four- or six-year graduation rates or total degree production. However, when looking at graduation rates by race/ethnicity, ECH appeared to increase the six-year graduation rate for Hispanic/Latino students between 2.5 percent and 3.4 percent. At the same time, there was marginal evidence that the six-year graduation rate for African-American students dropped between 3.5 percent and 4.2 percent after ECH adoption. 

Study results indicated that four years after ECH adoption, overall median student debt increased between 5.7 percent and 7.2 percent. The impact of ECH policies on student debt was concentrated among low- and middle-income students.

Looking at subgroups of students by family income, the researchers found that after state adoption, high-income students (family incomes of greater than $75,000) did not experience any significant increase in debt. Low-income students (family incomes of less than $30,000) saw between a 4.1 percent and 5.1 percent increase in median debt four years post-ECH adoption, and middle-income students (family incomes of between $30,000 and $75,000) experienced an increase of between 5.3 percent and 5.6 percent.  

“Despite the tuition surcharges associated with ECH policies, our results appear to show that these policies have little effect on facilitating more timely graduation,” said Kramer, an assistant professor of education policy and director of the Education Policy Research Center at the University of Florida. “This is likely due to the lack of information that students have about the policies and the timing of the surcharge.”

“The tuition surcharge only affects students once they cross the predetermined threshold, and at that point it is too late for significant changes to a student’s course plan,” Kramer said. “In order to combat this information gap, college and university administrators could design advising and degree plan supports which provide students the necessary information about excess credit hour policies early so they can make an appropriate course-planning decisions.”

“State policymakers may want to adopt ECH policies in order to ration limited state funds across a larger number of students,” said Robert Kelchen, an assistant professor of higher education at Seton Hall University. “However, their lack of effect on increasing on-time degree completion and related increases in student debt for lower-income and middle-income families raise concerns about the implications of ECH for students and their families.”

The study found that attending a doctoral degree–granting institution appeared to significantly reduce the effects of ECH on increases in median debt across family income levels, whereas students enrolled in bachelor’s degree–granting institutions were most affected by ECH policies. The researchers noted that student access to additional financial resources and larger institutional grants at doctoral institutions may explain the overall reduced effects on debt.

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The American Educational Research Association (AERA) is the largest national interdisciplinary research association devoted to the scientific study of education and learning. Founded in 1916, AERA advances knowledge about education, encourages scholarly inquiry related to education, and promotes the use of research to improve education and serve the public good. Find AERA on Facebook and Twitter.