Earning a college degree is a fulfilling life experience – and a costly one. Student debt is continually rising and increasingly emerging as a policy concern. Though student loans are supposed to help students, some question the long-term effects on student borrowers. Community college and for-profit students in particular are at risk. They often don’t have the resources necessary to understand the implications of a complicated loan origination process.

Student Debt

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Andrew Barr, Kelli Bird, & Benjamin Castleman published a new working paper this week. Their research focused on student loan borrowing at the Community College Of Baltimore County. Using Signal Vine’s platform, the researchers connected student loan applicants with financial aid counselors via text message. Providing students with information about the borrowing process led to a significant decrease in student borrowing. The highest impact was seen among Black students, low-income students, and students with lower high school GPAs.

“Our results show that community college students’ borrowing decisions are influenced by simplified information about the loan origination process and access to one-on-one financial aid counseling,” states the research. Using the familiarity and simplicity of texting is a great way to educate students about their loan borrowing habits and encourage them to make informed choices.

Read the full working paper.

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