@article{TEXTUAL,
      recid = {14444},
      author = {Kuan, Robert and Blagg, Kristin and Castleman, Benjamin L.  and Darolia, Rajeev and Matsudaira, Jordan D. and Milkman,  Katherine L. and Turner, Lesley J.},
      title = {Behavioral nudges prevent loan delinquencies at scale: A  13-million-person field experiment},
      journal = {PNAS},
      address = {2025-01-23},
      number = {TEXTUAL},
      abstract = {Americans collectively hold over $1.6 trillion in student  loan debt, and over the last decade millions of borrowers  have defaulted on loans, with serious consequences for  their financial health. In a 13-million-person field  experiment with the U.S. Department of Education, we tested  the effectiveness of different email interventions to  inform borrowers about alternative repayment options after  a missed loan payment. Our interventions tested whether  sending monthly behaviorally-informed emails, providing  follow-up reminders, framing benefits in percentage (vs.  dollar) terms, and providing just one recommended action  step at a time (vs. two) affected borrower outcomes. We  find that i) behaviorally-informed emails reduce estimated  60-d delinquencies by 0.42 pp, ii) reminders boost the  efficacy of such emails by 0.57 pp, iii) describing  potential savings in percentage terms is more effective  than describing these benefits in dollar terms, reducing  estimated delinquencies by 0.14 pp, and iv) encouraging two  actions (i.e., enrollment in income-driven repayment plans  and auto debit programs) repeatedly across two emails is  marginally more effective than encouraging one action  at-a-time across two emails, reducing estimated  delinquencies by 0.05 pp. Overall, if scaled to all  13-million borrowers in our experiment, we estimate that  our best-performing intervention would have averted  approximately 79,800 60-d delinquencies. Our findings i)  highlight the benefits of describing potential savings in  percentage terms, which may magnify perceived savings for  recipients, ii) underscore the risks of oversimplification,  and iii) demonstrate that nudges can be an effective,  low-cost complement to other policies for reducing  delinquencies and supporting borrowers with student loan  debt.},
      url = {http://knowledge.uchicago.edu/record/14444},
}