Information Use and Attention Deferment in College Student Loan Decisions: Evidence From a Debt Letter Experiment

A prominent concern is that college students are harming their long-term economic prospects by making student loan decisions without full information about the implications of their choices. We designed an experiment to examine students’ responses to a debt letter, an increasingly popular strategy to provide easily accessible information about student loans. The debt letters are modeled after requirements in recent state laws that attempt to encourage students to make informed borrowing decisions. Our results suggest that information alone is not sufficient to systematically change students’ borrowing choices. The debt letter led to no change in the amount that students borrow or the likelihood that they will borrow. We supplement results from the experiment with semistructured interviews to examine why the intervention did not change behavior.