TY - JOUR
T1 - Student loan nudges
T2 - Experimental evidence on borrowing and educational attainment
AU - Marx, Benjamin Michael
AU - Turner, Lesley J.
N1 - Publisher Copyright:
© 2019 American Economic Association.
PY - 2019/5/1
Y1 - 2019/5/1
N2 - We provide the first experimental evidence on the effect of student loans on educational attainment. Loan amounts listed in financial aid award letters ("offers") do not alter students' choice sets but significantly affect borrowing. Students randomly receiving a nonzero offer were 40 percent more likely to borrow than those who received a $0 offer. Per additional borrower, loans increased by $4,000, GPA and completed credits increased by 30 percent, and transfers to four- year public colleges increased by 11 percentage points. Cost- benefit and theoretical analyses suggest nonzero offers enhance welfare, yet over five million students are not currently offered loans.
AB - We provide the first experimental evidence on the effect of student loans on educational attainment. Loan amounts listed in financial aid award letters ("offers") do not alter students' choice sets but significantly affect borrowing. Students randomly receiving a nonzero offer were 40 percent more likely to borrow than those who received a $0 offer. Per additional borrower, loans increased by $4,000, GPA and completed credits increased by 30 percent, and transfers to four- year public colleges increased by 11 percentage points. Cost- benefit and theoretical analyses suggest nonzero offers enhance welfare, yet over five million students are not currently offered loans.
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U2 - 10.1257/pol.20180279
DO - 10.1257/pol.20180279
M3 - Article
AN - SCOPUS:85066049179
SN - 1945-7731
VL - 11
SP - 108
EP - 141
JO - American Economic Journal: Economic Policy
JF - American Economic Journal: Economic Policy
IS - 2
ER -