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Teaching Financial Wellness: the Effects of Personalized Debt Counseling for At-Risk Borrowers
Last registered on August 17, 2020

Pre-Trial

Trial Information
General Information
Title
Teaching Financial Wellness: the Effects of Personalized Debt Counseling for At-Risk Borrowers
RCT ID
AEARCTR-0003620
Initial registration date
September 26, 2019
Last updated
August 17, 2020 11:30 AM EDT
Location(s)

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Primary Investigator
Affiliation
University of Arizona
Other Primary Investigator(s)
Additional Trial Information
Status
On going
Start date
2017-11-06
End date
2021-08-31
Secondary IDs
Abstract
I evaluate a randomized controlled trial of high-touch financial counseling sessions provided by a non-profit financial wellness organization. Counseling sessions consist of thirty- to sixty-minute phone calls, in which counselors help individuals prioritize their debts and construct a detailed budget. Drawing from a sample of highly-distressed student loan borrowers, I measure the impact of these counseling sessions on a variety of financial health outcomes, including credit scores, bankruptcies, credit card balances, and student loan delinquencies.
External Link(s)
Registration Citation
Citation
Herbst, Daniel. 2020. "Teaching Financial Wellness: the Effects of Personalized Debt Counseling for At-Risk Borrowers." AEA RCT Registry. August 17. https://doi.org/10.1257/rct.3620-1.1.
Sponsors & Partners

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Experimental Details
Interventions
Intervention(s)
The intervention consists of high-touch financial counseling sessions provided by a non-profit financial wellness organization. Counseling sessions consist of thirty- to sixty-minute phone calls, in which counselors help individuals prioritize their debts and construct a detailed budget.
Intervention Start Date
2017-11-06
Intervention End Date
2018-04-23
Primary Outcomes
Primary Outcomes (end points)
Credit bureau outcomes: credit scores; number of credit cards; credit card delinquencies, balances, limits, and utilization rates; mortgage balances and delinquencies; auto loan balances and delinquencies; bankruptcies;

Student loan outcomes: student loan balances; repayment plan choice, automatic payment enrollment, delinquencies (any, 90+ days , 270+ days), deferments/forbearances, and unemployment deferments.
Primary Outcomes (explanation)
Secondary Outcomes
Secondary Outcomes (end points)
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
A large student loan servicer provided me a list of anonymized identifiers linked to annual credit bureau data and monthly student loan information. The list population included any borrower who had received a delinquency call from the servicer between 2012 and 2016. From this list I randomly selected a fifty-percent sample of "treatment eligible" borrowers and generated a borrower-level "financial wellness index" based on credit bureau and student loan information. I then provided the list to the loan servicer, which regularly contacts delinquent borrowers through incoming and outgoing phone calls handled by loan servicing agents.

During the intervention period, calls between borrowers and servicer were placed and received as usual. However, call agents were notified of borrowers' treatment eligibility once they were connected to a call. Upon connecting with a treatment-eligible borrower, call agents would ask borrowers if they were interested in free financial counseling. If a borrower consented to the counseling treatment, the call agent would transfer the call to the non-profit financial counselor along with that borrower's anonymized identifier. The financial counselor would then initiate the counseling session.

To make sure the financial counselor did not receive too many or too few calls over a given period, treatment eligibility was ratcheted up or down depending on the flow of calls. Using the treatment eligibility list and financial wellness index, the loan servicer started with a small group of its most distressed borrowers and gradually increased who would be referred for treatment. Importantly, I retain anonymized identifiers and index values for all treatment-eligible and control borrowers.

After 250 borrowers have received treatment, the intervention will cease, and the financial counseling organization will provide me a list of dates, times, and anonymized identifiers corresponding to each counseling session. The loan servicer will continue to collect credit bureau and student loan information for all borrowers through their normal operations. Specific dates are not yet determined, but I will wait one to three years before collecting outcome data from the servicer for analysis. Follow-up data collection will take place in subsequent years for longer-term outcomes.
Experimental Design Details
Not available
Randomization Method
Randomization was done in office by a computer.
Randomization Unit
Randomization took place a the individual level.
Was the treatment clustered?
No
Experiment Characteristics
Sample size: planned number of clusters
210,008 individuals
Sample size: planned number of observations
210,008 individuals per month for 12 to 120 months, depending on collection period
Sample size (or number of clusters) by treatment arms
250 treated individuals
105,004 "treatment eligible" individuals
105,004 control individuals
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
Princeton University Institutional Review Board for Human Subjects
IRB Approval Date
2017-01-27
IRB Approval Number
0000008090