ERIC Number: ED615327
Record Type: Non-Journal
Publication Date: 2021-Apr
Pages: N/A
Abstractor: As Provided
ISBN: N/A
ISSN: N/A
EISSN: N/A
The Effects of Default Choice on Student Loan Borrowing: Experimental Evidence from a Public Research University. Working Paper 28703
Kramer, Dennis A., II; Lamb, Christina J.; Page, Lindsay C.
National Bureau of Economic Research
We explore the role of defaults and choice architecture on student loan decision-making, experimentally testing the impact pre-populating either decline or accept decisions compared to an active choice, no pre-population, decision. We demonstrate that the default choice presented does influence student loan borrowing decisions. Specifically, compared to active choice, students presented within a pre-populated decline decision were almost five percent less likely to accept all packaged loans and borrowed between 4.6 and 4.8 percent less in federal educational loans. The reductions in borrowing appears to be concentrated within unsubsidized loans with those assigned to the opt-in condition borrowing 8.3 percent less in unsubsidized loans. These changes in borrowing did not induce substitution towards private or Parent PLUS loans nor did they negatively impact enrollment, academic performance, or on-campus work outcomes in the same academic year.
Descriptors: Loan Default, Student Loan Programs, Decision Making, Federal Aid, Enrollment, Academic Achievement, College Students, Public Colleges, Research Universities
National Bureau of Economic Research. 1050 Massachusetts Avenue, Cambridge, MA 02138-5398. Tel: 617-588-0343; Web site: http://www.nber.org
Publication Type: Reports - Research
Education Level: Higher Education; Postsecondary Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: National Bureau of Economic Research
Grant or Contract Numbers: N/A