Student loans, spending, and parental transfers: insights from a nudge in student loan policy in the Netherlands

This paper investigates the effect of student loans on students’ (financial) behavior. For causal identification, we exploit quasi-experimental evidence using a nudge in the take-up of student loans in higher education in the Netherlands. We estimate an instrumental variable (IV) model with a first-stage Difference-in-Differences design. We find that a decline in the default student loan reduced monthly student borrowing by 141 euros. A one-euro decline in student loans reduced students’ expenditures by 61 cents, but also led to a substantial increase of parental financial contributions (43 ce... Mehr ...

Verfasser: Been, Jim
Knoef, Marike
Dokumenttyp: Artikel
Erscheinungsdatum: 2023
Reihe/Periodikum: Been , J & Knoef , M 2023 , ' Student loans, spending, and parental transfers: insights from a nudge in student loan policy in the Netherlands ' , Economics of Education Review , vol. 96 , 102457 . https://doi.org/10.1016/j.econedurev.2023.102457
Schlagwörter: Student loans / Quasi-experiment / Parental transfers / Consumption / Academic performance
Sprache: Englisch
Permalink: https://search.fid-benelux.de/Record/base-29193636
Datenquelle: BASE; Originalkatalog
Powered By: BASE
Link(s) : https://research.tilburguniversity.edu/en/publications/d360b770-5a7a-449a-84be-3faccb84831c

This paper investigates the effect of student loans on students’ (financial) behavior. For causal identification, we exploit quasi-experimental evidence using a nudge in the take-up of student loans in higher education in the Netherlands. We estimate an instrumental variable (IV) model with a first-stage Difference-in-Differences design. We find that a decline in the default student loan reduced monthly student borrowing by 141 euros. A one-euro decline in student loans reduced students’ expenditures by 61 cents, but also led to a substantial increase of parental financial contributions (43 cents). Especially expenditures on leisure activities were affected. There is no evidence for increased labor earnings among students, on average. Self-reported indicators of academic performance do not worsen in response to the reform; students’ GPA even improves.