Informational and Cost Nudges in the Community College Student Loan Acceptance Process

• In Event: 28.047 - Financial Aid Verification, Nudges, and the Burden of Loans: Understanding Effects

Abstract

Utilizing an experimental design, this study builds on the growing literature that advocates the applicability of behavioral “nudges” in assisting students to make better long-term college-going and financial decisions. We exploit the online loan acceptance process at a large community college to test how the provision of decision aids in the form of loan information and cost figures can impact initial take-up decisions. Findings indicate the provision of information, without cost, has the greatest likelihood of reducing loan take-up for community college students. Cost figures may induce borrowing, and the way cost is presented has an impact on borrowing decisions. Course registration timing was found to have a significant impact on how students react to the interventions.

Authors

• Kayla Charles, University of Florida

• Dennis Allan Kramer, University of Florida