Navigating Higher Education Insurance: An Experimental Study on Demand and Adverse Selection

Sidhya Balakrishnan, Eric Bettinger, Michael Kofoed, Dubravka Ritter, Douglas Webber, Ege Aksu and Jonathan S. Hartley

No 32260, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We conduct a survey-based experiment with 2,776 students at a non-profit university to analyze income insurance demand in education financing. We offered students a hypothetical choice: either a federal loan with income-driven repayment or an income-share agreement (ISA), with randomized framing of downside protections. Emphasizing income insurance increased ISA uptake by 43%. We observe that students are responsive to changes in contract terms and possible student loan cancellation, which is evidence of preference adjustment or adverse selection. Our results indicate that framing specific terms can increase demand for higher education insurance to potentially address risk for students with varying outcomes.

JEL-codes: D14 D82 G51 H81 I22 (search for similar items in EconPapers)
Date: 2024-03
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Working Paper: Navigating Higher Education Insurance: An Experimental Study on Demand and Adverse Selection (2024)
Working Paper: Navigating Higher Education Insurance: An Experimental Study on Demand and Adverse Selection" (2024)
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