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Trial Status
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Before
in_development
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on_going
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Abstract
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Before
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.
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After
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 investigate how the framing of loan offers and provision of additional information about student loan options 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 anonmyous community colleges. The first experiment, conducted over the 2015-16 academic year, involved random assignment of nonbinding student loan offers. Students’ ability to borrow did not vary: 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) was affected. Students’ financial and academic outcomes will be tracked for five years, with information on borrowing and academic outcomes obtained from institutional administrative data and a match to the National Student Clearinghouse. The second experiment, conducted over the 2016-17 academic year, involved random assignment of emails to students who had recieved their financial aid award information (including student loan offers) but had not year made their borrowing decisions. Emails included information relevant for students' borrowing decisions: that students could borrow an amount different than that listed in their award letter, the average conditional amount borrowed per year by past graduates, and the average unconditional amount borrowed per year by past geaduates. This project will improve our understanding of college students’ financial decision making and will provide guidance to help colleges across the country package and provide information about student loans to best serve their students’ needs.
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JEL Code(s)
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Before
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I22, D91, D12, D14, H31
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Last Published
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Before
April 21, 2015 09:36 PM
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After
May 23, 2019 06:47 PM
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Intervention (Public)
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Before
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 a combination of subsidized and unsubsidized loans (determined by student need) equal to $3500 (first-year students) or $4500 (second-year students). Independent students in the control group will receive a financial aid award letter listing the above loan amount and an additional $4000 in unsubsidized loan aid, Students assigned to the treatment group will be presented with a loan amount of zero regardless of student level or 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).
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After
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).
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Experimental Design (Public)
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Before
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, expected family contribution, dependency status, and unmet need (which determines eligibility for subsidized loan aid).
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.
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After
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.
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Randomization Method
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Before
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).
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After
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).
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Sample size (or number of clusters) by treatment arms
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Before
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.
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After
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.
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Additional Keyword(s)
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Before
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student loans, higher education, choice architecture, behavioral economics, consumer finance.
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Secondary Outcomes (End Points)
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Postsecondary attainment (e.g., credits attempted and earned, degree or credential receipt, grade point average)
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