Student Loan Choice Overload

Working Paper No. 25905 What influences college student borrowing? In a field experiment with a large community college, we send emails about federal student loans to students who have received information about financial aid but have not made a borrowing decision. A treatment reminding students tha...

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Bibliographic Details
Published inNBER Working Paper Series p. 25905
Format Paper
LanguageEnglish
Published Cambridge National Bureau of Economic Research, Inc 01.05.2019
Subjects
Borrowing
Clinical trials
Economic theory
Student loans
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Summary:Working Paper No. 25905 What influences college student borrowing? In a field experiment with a large community college, we send emails about federal student loans to students who have received information about financial aid but have not made a borrowing decision. A treatment reminding students that they need not borrow the maximum amount of available loan aid does not affect borrowing. Treatments referencing amounts borrowed by recent graduates shift students from borrowing the maximum amount to not borrowing. Consistent with the hypothesis that students experience choice overload when observing multiple dollar amounts, the response is largest among low-performing students and arises from inaction.
ISSN:0898-2937
DOI:10.3386/w25905