Nudging Students Towards Better Borrowing Decisions

This project involves anonmyous community colleges. At each site, the intervention involves changes in the presentation or provision of information about federal Stafford Loan options. 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 first experimental site, students in the treatment group will receive a financial aid award letter listing a combination of subsidized and unsubsidized loans (determined by student need) equal to $3500 (first-year students) or $4500 (second-year students). Students assigned to the control group will be presented with a loan amount of zero regardless of student level or dependency status.

At the second experimental site, students who had received a financial aid award letter (which included nonzero loan offers) but who had not yet made a borrowing decision less than a month before the start of the fall semester were randomly assigned to recieve one of four emails. All students received an email reminding students to make a borrowing decision and informing them of the steps to do so. Control group emails contained no additional information. The email to the students assigned to the three treatment groups also contained a statement that they could borrow an amount other than that listed on their award letter. Students assigned to the second and third treatment groups were informed of the average annual conditional amount borrowed by past graduates ($3000) or the average annual unconditional amount borrowed by past graduates ($800).

2015-04-22

2016-06-01

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).

Postsecondary attainment (e.g., credits attempted and earned, degree or credential receipt, grade point average)

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 is 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, expected family contribution, dependency status, and unmet need (which determines eligibility for subsidized loan aid).

Researchers are provided with a list of students who have completed their federal student aid application. This list includes 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.

Randomization by computer. On a regular basis, experimental sites 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).

Students

No

Approximately 56,000 students

Approximately 56,000 students

Site 1: approximately 10,000 students assigned to the treatment and control groups, for a total sample size of approximately 20,000 students.
Site 2: approximately 3,000 students assigned to one of four groups (control, treatments 1 through 3), for a total sample size of approximately 12,000 students.