Does Salient Financial Information Affect Academic Performance and Borrowing Behavior among College Students?

Maximilian Schmeiser, Christiana Stoddard and Carly Urban

No 2015-75, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: While rising student loan debt can plague college students future finances, few federal programs have been instituted to educate college students on the mechanics of student loan borrowing. This paper exploits a natural experiment in which some students received \"Know Your Debt\" letters with incentivized offers for one-on-one financial counseling. Montana State University students who reached a specific debt threshold received these letters; University of Montana students did not. We use a difference-in-difference-in-differences strategy to compare students above and below the thresholds across campuses and before and after the intervention to determine how the letters affect student behavior. Employing a rich administrative dataset on individual-level academic records and financial aid packages, we find that students receiving the letters borrow an average of $1,360, less in the subsequent semester--a reduction of one-third. This does not adversely affect their academic performance. In fact, those who receive the intervention take more credits and have higher GPAs in the subsequent semester.

Keywords: financial counseling; financial education; financial literacy; higher education; student loans (search for similar items in EconPapers)
Pages: 35 pages
Date: 2015-09-10
New Economics Papers: this item is included in nep-edu
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Citations: View citations in EconPapers (3)

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http://www.federalreserve.gov/econresdata/feds/2015/files/2015075pap.pdf Full text (application/pdf)
http://dx.doi.org/10.17016/FEDS.2015.075 http://dx.doi.org/10.17016/FEDS.2015.075 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2015-75

DOI: 10.17016/FEDS.2015.075

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