Indian students’ attitude toward educational debt: scale development and validation

Date14 October 2019
Published date14 October 2019
AuthorJagdish Kaur,Sangeeta Arora
Subject MatterEducation,Educational evaluation/assessment
Indian studentsattitude toward
educational debt: scale
development and validation
Jagdish Kaur and Sangeeta Arora
University School of Financial Studies, Guru Nanak Dev University,
Amritsar, India
Purpose This paper aimsto develop, rene and validate a multidimensional scale for measuring students
attitude toward educational debt for higherstudies in Punjab (India) and the impact of this attitude on the
satisfactionof students.
Design/methodology/approach The study uses interview and survey approach. The sample
comprises 417 students from four public and four privateuniversities of Punjab (India). Exploratory factor
analysis and conrmatory factoranalysis have been used to develop and validate studentsattitude toward
education loan scale (Morgado et al., 2017). Further, structural equation modeling (SEM) has been used to
analyze theimpact of factors of studentsattitude on their satisfaction.
Findings The scale has been tested for both reliability and validity.Analysis has revealed six factors of
studentsattitude toward educational debt, namely, economic empowerment, social empowerment, utility,
procedural requirements, risk and stress. These, six independent variables and one dependent variable,i.e.
studentssatisfaction,were entered into structural equationmodel. The structural equation model shows that
procedural requirements,economic empowerment and utility have a positive, whereas stress has a negative
and signicantimpact on the studentssatisfaction.
Practical implications Education nancing is a gigantic problem nowadaysdue to the high cost of
self-nancing coursesin Punjab. To make higher education accessible to all students, education loan playsa
vital role. Thus, the attitudeof students is of great importance to policymakers to bring reforms in education
loan scheme.
Originality/value To the best of the authorsknowledge,this study is the foremost study for developing
a validated toolto measurethe studentsattitude toward educationaldebt in India.
Keywords Universities, Scale, Higher education, Studentsattitude
Paper type Research paper
1. Introduction
Higher education is the key requirementfor the development and growth of every country. It
is an important form of investment in the human capital. Given the rising cost of higher
education, an access to higher education is becoming a common problem worldwide,
particularly for middle and low income families. However, to make higher education
affordable for every incomebracket, education loans have been introduced globally. Almost
every country now has its own education loan system,which enables students to fulll their
direct or indirect cost requirements. In India, long back in 1963, the National Loan
Scholarship Scheme was introduced, but it had to be discontinued in the year 1991 due to
non-repayment of loans (Tilak, 1992). Then, in 2001,after a decade, the Indian Government
in consultation with the Reserve Bank of India (RBI) and the Indian BanksAssociation
(IBA) introduced an IBA ModelEducational Loan Scheme, which grew phenomenally, by an
average annual growth rate of 28.7per cent in terms of accounts and 38 per cent in terms of
Received29 December 2018
Revised24 April 2019
Accepted4 May 2019
QualityAssurance in Education
Vol.27 No. 4, 2019
pp. 361-383
© Emerald Publishing Limited
DOI 10.1108/QAE-12-2018-0131
The current issue and full text archive of this journal is available on Emerald Insight at:
amounts (Rani, 2016). Generally, Indian parents provide nancial support for their
childrens education, but the study of HSBCsValue of Education Foundations found that a
vast majority (71 per cent)of parents in India are willing to take education loan to fund their
childs university or college education (The Indian Express, 2016). According to economic
survey of India, 2,384 thousand students availed 60,010 crore education loan in 2017-2018.
The average (approximate)amount of loan taken by borrowers is 4 lakhs (Jayadev, 2017).
As per the guidelines of the IBA Model Education Loan Scheme, any Indian National
student who has secured admission in recognized institutions in India or abroad is eligible
for a loan. The maximum amount of loan can be borrowed up to Rs 10 lakh for studies in
India and Rs 20 lakh for studyingabroad. Margins and collateral security requirements vary
across loan amounts. Interest rates are linked to the base rate and vary across banks,
generally range from 12 per cent to 15 per cent. The repayment period is 15 years, which
starts 6 monthsafter getting a job or 1 year after completion of course, whichever is earlier.
In India, both public and private sector banks provide education loans, but public sector
banks have distributed the lionsshare of the amount (Jayadev, 2017).
Despite the importance of higher education and increasing number of education loan,
research in this area has been largely overlooked, especially with respect to students
attitude toward debt. However, the issue of attitude is of crucial importance while drawing
the nal evaluation of a loan scheme, for instance, Livingstone and Lunt (1992) identied
attitude as an important predictor of debt and debt repayments. Moreover, Ismail et al.
(2011) reported that the studentsattitude toward loan (positive or negative) predicts loan
repayment intentions and Callender and Jackson (2005) found the relationship between
prospective higher education studentsattitudes to debt and their decisions to enter into
higher education.
However, there exist only handful studies primarily focused on studentsattitudes
toward education loan (Davies and Lea, 1995;Haultain et al. 2010;Kaur and Singh, 2012;
Harrison et al. 2015b;Park et al. 2015). In addition, the education loan burden propelsmany
students to commit suicide as reported by Kanitkar (2004) and The New Indian Express
(2016). The students, who are the future of every nation, should have sound mental health.
Yet, this susceptible issue relatedto humans is not given much stress earlier, which should
be considered.
The previous research on studentsattitude toward debt, developed a debt scale, in the
Western context, but not in developing countries like India. India is a non-Western
(collectivistic) country and its culture is different from western (individualistic) countries
(Chadda and Deb, 2013). Likewise, Harrison et al. (2015b) developed the latest scale on
studentsattitude toward debt reported that, the perspectives of students may well be
different for other nations, particularly outside of the Anglophone world. Accordingly, the
scale developed in Western countries cannot be applied in non-western countries due to
differences in cultural,economic and legal systems.
As a consequence, there is dire need in the academic research for a reliable and valid scale
for measuring studentsattitude toward educational debt in the developing countries.
Therefore, the present research aims to systematically develop and validate multidimensional
scale for measu ring students attitude. Further the impact of this measured attitude on
studentssatisfaction is investigated. This scale can be used by the policy makers and the
bankers to evaluate and restructure their education loan schemes. The rst section reviews
literature on studentsattitude toward debt followed by a scale development procedure and
statistical results. Then, the impact of studentsattitude on their satisfaction with regard to
education loan has been investigated. Further, discussion and implications of empirical results
followed by limitations of the study and future research directions.

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