Do Student Loans Compensate for Parental Resources? The Role of Student Loans in The Transition to Higher Education

Overview & Synopsis

The expansion of higher education through the privatisation of funding sources raises a question regarding socioeconomic inequality in participation in higher education. To explore mechanisms of educational inequality, this study examines how different indicators of socioeconomic background work together to influence both participation in higher education and student loan uptake via a longitudinal survey of students and their mothers in Japan. The results showed that: first, parental education, household income, and savings independently affect the chance of attending a higher education institute; second, parental education and economic resources have an interaction effect in that high parental education mitigates the impact of economic resources; third, this compensation between different resources occurs by taking advantage of student loans. Students from families with lower economic resources but high parental education are more likely to be the beneficiaries of student loans.