IDEAS home Printed from https://ideas.repec.org/a/aea/aejpol/v11y2019i2p108-41.html

Student Loan Nudges: Experimental Evidence on Borrowing and Educational Attainment

Author

Listed:
  • Benjamin M. Marx
  • Lesley J. Turner

Abstract

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.

Suggested Citation

  • Benjamin M. Marx & Lesley J. Turner, 2019. "Student Loan Nudges: Experimental Evidence on Borrowing and Educational Attainment," American Economic Journal: Economic Policy, American Economic Association, vol. 11(2), pages 108-141, May.
    • Handle: RePEc:aea:aejpol:v:11:y:2019:i:2:p:108-41
    Note: DOI: 10.1257/pol.20180279
    as

    Download full text from publisher

    File URL: https://www.aeaweb.org/doi/10.1257/pol.20180279
    Download Restriction: no
    File URL: https://www.aeaweb.org/articles/attachments?retrieve=6MtWSzsrdUlVxtLYh-QIYfS9I7q2H84J
    Download Restriction: no
    File URL: https://www.aeaweb.org/articles/attachments?retrieve=-XSnzJVfd9f2YuGbLlKzlZT03Jh9Fvu4
    Download Restriction: no
    File URL: https://www.aeaweb.org/articles/attachments?retrieve=jKlX8ujh_7uD7_ReejDS9bNU7irELWO1
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    ---><---

    Other versions of this item:

    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aejpol:v:11:y:2019:i:2:p:108-41. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.