The Effect of Reduced Student Loan Borrowing on Academic Performance and Default: Evidence from a Loan Counseling Experiment Jun 01, 2019 By Andrew BarrKelli BirdBenjamin Castleman The Effect of Reduced Student Loan Borrowing on Academic Performance and Default: Evidence from a Loan Counseling Experiment Student loan borrowing for higher education has emerged as a top policy concern. Policy makers at the institutional, state, and federal levels have pursued a variety of strategies to inform students about loan origination processes and how much a student has cumulatively borrowed, and to provide students with greater access to loan counseling. We conducted an experiment to evaluate the impact of an outreach campaign that prompted loan applicants at a large community college to make informed and active borrowing decisions and that offered them access to remote, one-onone assistance from a loan counselor. The intervention led students to reduce their unsubsidized loan borrowing by 7 percent, resulted in worse academic performance, and increased the likelihood of loan default during the three years after the intervention occurred. Our results suggest policy makers and higher education leaders should carefully examine the potential unintended consequences of efforts to reduce student borrowing, particularly in light of growing evidence regarding the counter-intuitive positive relationship between reduced borrowing levels and worse student academic and financial outcomes. Link to Paper Areas of focus Education UVA partners EdPolicyWorks: Center for Education Policy and Workforce Competitiveness Andrew Barr Kelli Bird Benjamin Castleman Ben Castleman is an associate professor of education and public policy at the Batten School and the founder and director of the Nudge4 Solutions Lab at UVA. His research focuses on policies to improve college access and success for low-income students. Several of his papers examine innovative strategies to deliver high-quality information about the college-going process to low-income students and their families, and to ease the process of students and families getting professional support when they need assistance Read full bio Related Content Benjamin Castleman Unfinished Business? Academic and Labor Market Profile of Adults With Substantial College Credits But No Degree Research Using data from the Virginia Community College System (VCCS), this case provides the first detailed profile on the academic, employment, and earnings trajectories of the SCND population and how these compare with VCCS graduates. The scholars show that the share of SCND students who are academically ready to re-enroll and would benefit from doing so may be substantially lower than policy makers anticipate. Stacking the Deck for Employment Success: Labor Market Returns to Stackable Credentials Research With rapid technological transformations to the labor market along with COVID-19 related economic disruptions, many working adults return to college to obtain additional training or credentials. Using a comparative individual fixed effects strategy and an administrative panel dataset of enrollment and employment in Virginia, we provide the first causal estimates of credential “stacking” among working adults. Why aren’t more adults finishing community college? News Batten School professor Ben Castleman and colleagues explore programs enacted by states to increase enrollment in community colleges. Despite these efforts, numbers have been steadily declining for much of the 2010s. Is there a way to get adults back to community college? Four Batten Professors Ranked as Nation’s Most Influential Education Scholars News Batten School professors Daphna Bassok, Ben Castleman, Sarah Turner and Jim Wyckoff were among 200 scholars nationwide to rank as highly influential in education policy, according to Education Week.