Can targeted information affect academic performance and borrowing behavior for college students? Evidence from administrative data

- This paper studies a “Know Your Debt Letter” warning above average student loan borrowers at a large four-year public university. The letter also guided these students towards actionable academic decisions.
- We use administrative data to compare students who did and did not receive the letter in years before and after the intervention. We validate our results with a placebo test at a similar university in the same state that did not implement the intervention.
- Those receiving the letter did not change borrowing behavior, but recipients improved GPAs and increase retention.

More students than ever borrow to finance post-secondary education. However, students receive little information during the course of their college career that encourages them to recalibrate loan amounts and to consider academic and borrowing decisions jointly. This paper exploits a natural experiment to understand how targeted information can change student behavior. We study a large public university where students above a given debt threshold received letters with bundled information on student loan debt and effectively completing college, while students below the threshold did not. Using a difference-in-difference strategy and administrative data on individual-level academic records and borrowing, the intervention did not change borrowing in the subsequent semester but improved academic outcomes: credits completed and GPAs increased in the subsequent semester and retention rates increased.