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Nudging Students Towards Better Borrowing Decisions

Last registered on March 06, 2015

Pre-Trial

Trial Information

General Information

Title
Nudging Students Towards Better Borrowing Decisions
RCT ID
AEARCTR-0000633
Initial registration date
February 21, 2015

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
February 21, 2015, 5:59 PM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Last updated
March 06, 2015, 10:55 AM EST

Last updated is the most recent time when changes to the trial's registration were published.

Locations

Region

Primary Investigator

Affiliation
Vanderbilt University

Other Primary Investigator(s)

PI Affiliation
University of Illinois at Urbana-Champaign

Additional Trial Information

Status
In development
Start date
2015-03-11
End date
2020-03-01
Secondary IDs
Abstract
This project investigates how students make decisions around the financing of their college education and the impacts these decisions have on educational outcomes. Specifically, we will investigate how the framing of loan offers affects students' borrowing decisions and postsecondary outcomes. This research project will consist of a set of randomized controlled trials over the presentation of loan offers at three community colleges located in Illinois, Ohio, and Arizona. Students’ ability to borrow would not change: all students will have the option to borrow up to their maximum federal loan eligibility, and only the framing of the choice (e.g. whether or not a particular loan amount is referenced) will be affected. The experiments will be carried out during the financial aid award process for the 2015-2016 school year and students’ financial and academic outcomes will be tracked for five years. Information on academic outcomes will be obtained from each institution’s internal administrative data system. To obtain information on outcomes that are not available in administrative data, such as use of credit cards or other debt to finance college and hours worked while attending school, students will be surveyed. The project will improve our understanding of college students’ financial decision making and will provide guidance to help colleges across the country package loans to best serve their students’ needs.
External Link(s)

Registration Citation

Citation
Marx, Benjamin and Lesley Turner. 2015. "Nudging Students Towards Better Borrowing Decisions." AEA RCT Registry. March 06. https://doi.org/10.1257/rct.633-4.0
Former Citation
Marx, Benjamin and Lesley Turner. 2015. "Nudging Students Towards Better Borrowing Decisions." AEA RCT Registry. March 06. https://www.socialscienceregistry.org/trials/633/history/3752
Experimental Details

Interventions

Intervention(s)
This project involves three experimental sites: community colleges located within Ohio, Illinois, and Arizona. At each site, the intervention involves changes in the presentation of federal Stafford Loan offers. Students in the control group at each site will be presented with loan offers according to each institution's existing practices. This intervention will not affect students’ access to loans; in all cases students will be completely free to opt in, opt out, or change their loan amount in accordance with the rules of the student loan program. Additionally, upon completing an application for federal student aid – a prerequisite for receiving federal student aid – students are notified by the US Department of Education of their eligibility for federal loans. Thus, all students in our study will also be informed of their loan eligibility.

At the Ohio site, dependent students in the control group will receive a financial aid award letter listing the maximum subsidized federal loan they are eligible for, independent students in the control group will receive a financial aid award letter listing the maximum subsidized federal loan they are eligible for and a $4000 unsubsidized loan, and the treatment group will be presented with a loan amount of zero regardless of dependency status.

At the Illinois site, students in the control will be presented with a loan amount of zero on their financial aid award letters, while students in the treatment group will receive an award letter listing the maximum subsidized federal loan they are eligible for.

The Arizona site will involve two treatment arms. This institution uses an online system that asks students whether they want to borrow before displaying the financial aid package. Students who select “No” are then shown a financial aid package with $0 in federal loan aid. For those who select “Yes,” the institution lists a “base loan amount”. The first treatment arm will include a blank field next to the line on the award package for loan aid that the student will be prompted to fill in with his or her preferred loan amount (including $0). The second treatment arm will feature a blank loan offer as well, but it will also prompt students to complete a short budgeting worksheet prior to choosing a loan amount. Students in the control group who select "yes" when asked if they would like to borrow will be randomly assigned to receive an award package with a base amount that is randomized between 50% and 150% of the current amounts (i.e., $1,000 or $3,000/year for dependent students and $2,000 or $4,000/year for independent students).
Intervention Start Date
2015-03-11
Intervention End Date
2016-06-01

Primary Outcomes

Primary Outcomes (end points)
Financial outcomes (e.g., federal loan take-up and amounts, other debt take-up and amounts, loan repayment outcomes, and others where available).

Educational outcomes (e.g., enrollment, persistence, credits attempted and earned, GPA, major and/or degree program, degree receipt, transfers, and others where available).
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
At each of the three sites, students who are at least 18 years old who have submitted a FAFSA will be included in the intervention. Randomization will be stratified by student type (e.g., new versus returning), student level (e.g., first- versus second-year, determined by cumulative credits earned including transfer credits), outstanding loan debt, and expected family contribution.

Starting in March 2015, each school will provide the researchers with a list of students who have completed their federal student aid application, and thus are ready to have their award package completed. This list will include a research ID as well as the relevant variables for determining which stratum a student belongs to. The research team will conduct the random assignment and return to each school a list of research ids and the relevant treatment assignment. This procedure will take place on a regular basis.
Experimental Design Details
Randomization Method
Randomization by computer. On a regular basis, experimental sites will send a list of subjects (identified by a research id and strata). The project RA will run a program that allocates subjects into treatment group(s) and send the list back to the experimental site, which will in turn, implement the treatment(s).
Randomization Unit
Students
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
Approximately 56,000 students
Sample size: planned number of observations
Approximately 56,000 students
Sample size (or number of clusters) by treatment arms
Ohio site -- control group: 7,350 students; treatment group: 7,350 students.
Illinois site -- control group: 6,400 students; treatment group: 6,400 students.
Arizona site -- control group: 9,700 students; "blank" treatment: 9,700 students; "blank+worksheet" treatment: 9,700 students.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
University of Maryland College Park IRB
IRB Approval Date
2015-03-06
IRB Approval Number
N/A
IRB Name
University of Illinois at Urbana-Champaign Institutional Review Board (IRB)
IRB Approval Date
2015-01-05
IRB Approval Number
15366

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials