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Cited by 129Higher Education Research StudiesDecision-Making and Behavioral EconomicsFinancial Literacy, Pension, Retirement Analysis

Student Loan Nudges: Experimental Evidence on Borrowing and Educational Attainment

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Marx, Benjamin M., Turner, Lesley J.·2019·American Economic Journal: Economic Policy
DOI 10.1257/pol.20180279
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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. (JEL D14, D91, I22, I23)

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  • Marx and Turner (2019) run an RCT with financial aid applicants at one large community college, including both new and returning aid applicants.

    “One notable exception here is Marx and Turner (2019), who run an RCT with financial aid applicants at one large community college, including both new and returning aid applicants.”

    From College Costs, Financial Aid, and Student Decisions (2022) · cites this paper as Marx and Turner (2019)

  • The authors randomly assigned some aid applicants to receive a loan offer.

    “The authors thus randomly assigned some aid applicants to receive a loan offer (which they could then choose to accept or decline).”

    From College Costs, Financial Aid, and Student Decisions (2022) · cites this paper as Marx and Turner (2019)

  • Student loans generally improve outcomes for U.S. community college students.

    “Marx and Turner's (2019) RCT results are in line with other RCT and quasi-experimental evidence that student loans generally improve outcomes for U.S. community college students.”

    From College Costs, Financial Aid, and Student Decisions (2022) · cites this paper as Marx and Turner's (2019)

  • They find no effects on enrollment, but do find effects on loan uptake as well as on credit accumulation, GPA, and transfer to four-year colleges (estimated effects on degree completion were small and statistically insignificant, though the follow up window was only one year).

    “They find no effects on enrollment, but do find effects on loan uptake as well as on credit accumulation, GPA, and transfer to four-year colleges (estimated effects on degree completion were small and statistically insignificant, though the follow up window was only one year).”

    From College Costs, Financial Aid, and Student Decisions (2022) · cites this paper as Marx and Turner (2019)

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Cited by

Sorted by citations

Authors
Marx, B. M., & Turner, L. J.
Affiliations
  • University of Illinois Urbana-Champaign (US)
  • University of Maryland, College Park (US)
ORCID
Marx, Benjamin M.
Venue
American Economic Journal: Economic Policy
Publisher
American Economic Association
Published
2019-05-01
Volume
11
Issue
2
Pages
108-141
ISSN
  • 1945-7731 (ISSN-L)
  • 1945-774X
DOI
10.1257/pol.20180279
OpenAlex
W2757083765
Cited by
129
References
6
Citations by year
2026: 5 · 2025: 16 · 2024: 19 · 2023: 15 · 2022: 14 · 2021: 25 · 2020: 16 · 2019: 10 · 2018: 4 · 2017: 4 · 2016: 1
FWCI
43.85
Type
journal article
Language
en
Open access
Licence
other-oa
Locations
  • American Economic Journal Economic Policy (publishedVersion, other-oa)
  • RePEc: Research Papers in Economics (submittedVersion)
Funders
  • Russell Sage Foundation
  • Lumina Foundation
  • Sage Foundation
  • University of Illinois at Urbana-Champaign
Topics
  • Social Sciences › Education › Higher Education Research Studies
  • Social Sciences › Decision Sciences › General Decision Sciences › Decision-Making and Behavioral Economics
  • Social Sciences › Business, Management and Accounting › Accounting › Financial Literacy, Pension, Retirement Analysis
Keywords
student loans, nudging, educational attainment, GPA, college transfer, welfare effects, choice architecture, higher education funding

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