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Advances in Social Sciences Research Journal – Vol. 8, No. 11
Publication Date: November 25, 2021
DOI:10.14738/assrj.811.11196. Mbah, R. E. (2021). Expanding the Theoretical Framework in Student Debt Research by Connecting Public Policy Theories to the
Student Debt Literature. Advances in Social Sciences Research Journal, 8(11). 211-219.
Services for Science and Education – United Kingdom
Expanding the Theoretical Framework in Student Debt Research
by Connecting Public Policy Theories to the Student Debt
Literature
Ruth Endam Mbah
Public Policy Department
Southern University and A & M College, Baton Rouge, LA, USA
Department of Business, Bethany College, Lindsborg, KS, USA
ABSTRACT
Current changes in the economic atmosphere have severely impacted the higher
education sector worldwide. Policymakers worldwide are facing the challenge of
adjusting tuition and financial aid programs in response to these changing
economic times. The shift from federal grants to loans has caused student loans to
be a popular means of funding higher education for most low and medium-income
families. A result of this, is the increase in student loan default as most college
students graduate with unmanageable debts, thus, a rising concern for
policymakers. The purpose of this paper is to link four public policy theories (Social
Contract Theory, Utilitarian Theory, Theory of Neoliberalism, and Three-Policy
Stream Theory) to student loan literature. This is to expand the limited database of
public policy theories in student loan debt literature. This theoretical linkage points
out the role of policymakers in (1) ensuring the security of lives and the
preservation of the property of those who voted them into power (Social Contract
Theory); (2) establishing educational policies that ensure the ‘the greatest
happiness of the greatest number’ (Utilitarian Theory); (3) upholding social welfare
or a ‘welfare state’ through fiscal and monetary policies to ensure high employment
rates for graduates, low inflation and the provision of public goods (Theory of
Neoliberalism), and (4) the risk of undermining the growing power of an informal
interest group that is made up of millennials saddled with student loan debt (Three- Policy Stream). These theories reiterate the principal role of policymakers in
enhancing human capital through affordable education.
Keywords: Student Loan Debt; Higher Education; Social Contract Theory; Utilitarian
Theory; Public Policy Theories; Financial Aid
INTRODUCTION: THE CONCEPTS OF STUDENT LOAN DEBT
With the current rise of a tight budget, higher education students are required to pay more for
their educational careers (Lochner & Monge-Naranjo, 2016). As far as mid-1970, the shift from
federal grants to loans to finance higher education for low and medium-income families
emerged (Gross et al., 2010; Mbah, Forcha, & Mende, 2020; Mbah, 2021). Thus, student loans
have become a vital option for financing higher education for most students and will probably
remain the principal feature of the college education system for the predictable future (Perna,
Kvaal, & Ruiz, 2017). This is because student loans enable students and parents as well as
taxpayers to lessen the burden of financing the ever-increasing costs of higher education; like
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Advances in Social Sciences Research Journal (ASSRJ) Vol. 8, Issue 11, November-2021
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the costs of hiring teachers, tuition, school supplies, and other related student living costs. A
student loan is, therefore, “any repayment obligation resulting from a scheme designed
especially for students—generally with governmental sponsorship and some element of
governmental subsidization and/or assumption of risk—to defer higher educational expenses
and to incur thereby a repayment obligation, whether this obligation is called a loan or called
by some euphemism, and whether the obligation is to a fixed schedule of payments or is
expressed as some percentage of the borrower’s future earnings” (Johnstone & Marcucci,
2014).
About 70% of American college students accrue loans to finance their college degrees (Despard
et al., 2016; Mbah et al., 2020; Mbah, 2021). However, the continuous rise in student loan
demands, particularly among low-income, high-risk students as they borrow to cover their
higher education expenses, results in a rise in government’s losses to default claims (Greene,
1989; Scott-Clayton, 2018). The U.S. currently has a frightening sum of student loan debt, which
is expected to increase with the continuous rise in tuition. It has become the second-highest
debt faced by households after the mortgage. Student loan debt in the U.S. is $1.5 trillion owed
by 44.2 million borrowers (Kilgour, 2019; Latoya, 2019). Most students graduate with
unmanageable loans (Despard et al., 2016; King & Bannon, 2002; Pinto & Mansfield, 2006).
In the light of borrowers, a manageable debt permits borrowers to preserve a living standard
not dramatically dissimilar from their counterparts with similar educational qualifications and
incomes (Baum & Schwartz, 2006). Nevertheless, most students think these loans were
significantly helpful in the pursuit of their educational career as well as in attending the school
of their choice (Buam & O’Malley, 2003; Sandy & Diane, 1998). Surprisingly, despite the
availability of both private and federal loans to aid students to obtain higher education, some
students are unwilling to borrow (debt aversion) to finance their studies. This would likely hurt
college enrollment, persistence, and degree achievement (Baum, Mcpherson, & Steele, 2008).
In June 2010, outstanding student loan debt for the first time surpassed credit card debt as it
rose to more than $800 billion (Avery & Turner, 2012).
THE GAP IN LITERATURE/CONTRIBUTION TO LITERATURE
Despite the policy implications of the rise in student loan debt and the increased interest of
researchers in this field, there is a gap in public policy theories that relate to student loan debt
literature. Thus, the main purpose of this paper is to link four major public policy theories to
the student loan debt literature to close the existing gap. This paper will serve as a guide to
several scholars, especially research students whose dissertations or theses focus on the policy
aspect of student loan literature by providing theories for their theoretical framework. Also,
this paper will remind policymakers of their role in enhancing human capital development via
affordable education as postulated by well-respected founding fathers of public policy
philosophy.
PUBLIC POLICY THEORIES
The public policy theories give a public policy perspective to student loan debt. These theories
bring out the role of policymakers in shaping higher education and their responsibility in
ensuring its affordability/accessibility.
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Mbah, R. E. (2021). Expanding the Theoretical Framework in Student Debt Research by Connecting Public Policy Theories to the Student Debt
Literature. Advances in Social Sciences Research Journal, 8(11). 211-219.
URL: http://dx.doi.org/10.14738/assrj.811.11196
Social Contract Theory
Social Contract Theory is commonly associated with Thomas Hobbes (1588-1679), John Locke
(1632-1704), and Jean Jacques Rousseau (1717-1778) through their famous works; ‘Leviathan’,
‘Two Treatises of Government’ and ‘The Social Contract’ respectively (Ebenstein & Ebenstein,
2000). Ebenstein and Ebenstein (2000, p. 400) argue that Hobbes in his work titled “Leviathan”
stated that the ‘fear of death’ in the State of Nature (chaotic society with no law) pushed
mankind to seek peace, thus, indulge in a social contract. In Hobbes's social contract, the
contract is between ‘subjects and subjects and not subject and sovereign’ because the sovereign
is just a creation of the contract. In Hobbes contract, to preserve their lives and properties, these
subjects out of their freewill surrendered all of their rights and freedom to a sovereign power
whom they had to obey (absolutism) and in return receive protection of their lives and
properties (Ebenstein & Ebenstein, 2000, p. 412; Elahi, 2014).
Ebenstein and Ebenstein (2000, p. 430) argue that John Locke’s state of nature was not as
pessimistic as Hobbes’. It was a more peaceful state where the ‘Law of Nature’ ruled and no one
had the right to harm another person’s life, liberty, or property. Yet, this state of nature lacked
clarity, lacked an established law, had no third party that could act as a judge in case of a dispute,
and as such, a need for a social contract. Locke’s social contract was therefore to put in place
structured law and order to replace the uncertainties in the state of nature and eradicate
impartial institutions with the legislative that served as the trustee. The legislators therefore
ought to act in the interest of the people and not their own will because the people are the
supreme power and can remove the legislators if they act contrary to the trust proposed by the
people (Ebenstein & Ebenstein, 2000, p. 430). Thus, in Locke’s contract, the people did not
surrender all of their rights to a single individual but only the right to preserve their lives and
properties as well as ensure law and order (Elahi, 2014).
Ebenstein and Ebenstein (2000, p. 498) acknowledge that Jean Jacques Rousseau’s state of
nature was not as pessimistic as Hobbes’ state of nature but neither as optimistic as Locke’s
state of nature. Furthermore, these authors contend that Rousseau’s state of nature was
directed by two sentiments (self-interest and pity) because everyone pursued his/her self- interest until one realized that his/her strength was not strong enough to preserve him/her
against threats from others. Thus, Ebenstein and Ebenstein (2000, p. 498) notice that the role
of the social contract is to ‘combine security, which comes from the collective association, with
liberty, which the individual had before the making of the contract’ where the “Man is born free,
but everywhere he is in chains.” Elahi (2014) argues that in Rousseau’s social contract, the
people do not surrender their entire rights to a sovereign power but ‘each man gives himself to
all’ and thereby surrendering to no one specifically. This is the principle of the General Will,
wherein the people surrender their rights, not to a specific person but the community, and such
social organizations are to ensure rights, liberty, and freedom (Elahi, 2014).
Based on the review of existing literature, it appears that a common element drawn from all
three (Hobbes, Locke, and Rousseau) views of the social contract is the fact that, the
state/legislation/sovereign power ought to set laws and policies that ensure the security of
lives and the preservation of property. In other words, it is my understanding that the
state/legislature sets legislations that are for the common good of all, especially those who
voted them to power. This explains Nova (2019), a CNBC news reporter’s analysis of student
loan repayment as a top policy topic within the 2020 Presidential race. A total of 56% of