Graduation Year

2026

Date of Submission

11-2025

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Daniel Firoozi

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Terms of Use for work posted in Scholarship@Claremont.

Abstract

This study examines how the composition of financial aid, specifically the balance between loans and grants, shapes students’ academic performance, major selection, and early career outcomes. Using administrative data from the University of California system (2007-2019) and post-graduation records from UC Irvine, I analyze how loan reliance influences both educational trajectories and labor-market results. The key measure, loanshare, captures the fraction of total aid financed through loans rather than grants. This allows for comparisons among students with similar financial need, expected family contribution, and total aid levels. Results show that students with more loan-heavy aid packages earn significantly lower GPAs, complete fewer units, and display weaker academic engagement throughout college. They are modestly more likely to major in non-risky fields like computer science and engineering. After graduation, loan-heavy students earn roughly $11,000 less in median income and are less likely to pursue public service careers, despite comparable financial backgrounds. These findings suggest that debt composition constrains opportunity through both academic and behavioral mechanisms. Expanding need-based grant aid and reducing loan dependence may therefore promote equity in educational attainment and long-term career choice.

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