TY  - BOOK
AU  - Abraham,Katharine G.
AU  - Filiz-Ozbay,Emel
AU  - Ozbay,Erkut Y.
AU  - Turner,Lesley J.
ED  - National Bureau of Economic Research.
TI  - Framing Effects, Earnings Expectations, and the Design of Student Loan Repayment Schemes
T2  - NBER working paper series
PY  - 2018///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
N1  - April 2018; Hardcopy version available to institutional subscribers
N2  - Income-driven student loan repayment (IDR) plans provide protection against unaffordable loan payments and default by linking loan payments to borrowers' earnings. Despite the advantages IDR would offer to many borrowers, take-up remains low. We investigate how take-up is affected by the framing of IDR through a survey of University of Maryland undergraduates. When the insurance aspects of IDR are emphasized, students are significantly more likely to participate, while participation is significantly lower when costs are emphasized. IDR framing interacts with expected labor market outcomes. Emphasizing the insurance aspects of IDR has larger effects on students who anticipate a higher probability of not being employed and/or low earnings at graduation. In contrast, when costs are emphasized, IDR take-up is uncorrelated with students' expected labor market outcomes. Simulation results suggest that a simple change in the framing of IDR could generate substantial reductions in loan defaults with little cost to long-run federal revenue
UR  - https://www.nber.org/papers/w24484
UR  - http://dx.doi.org/10.3386/w24484
ER  -