Association for Public Policy Analysis & Management

Although the face of the student debt crisis has largely been students who leave college with $100,000 or more in student loans, such students represent a relatively small share of borrowers and have lower risk of default on average (Dynarski, 2016). Of growing concern, however, is student debt among community college students. Despite the community college sector’s relative low cost, nearly one-in-four borrowers default on loans after entering repayment (Campbell & Hillman, 2015; College Board, 2015; Dynarski, 2015).

The high default rate among community college students reflects a number of factors, including difficulty navigating the repayment process, relatively low graduation rates, and earnings after graduating. While each of these factors merits close attention, providing simple and salient information to students on the front-end when they make college financing decisions may also lead to improved outcomes (Campbell & Hillman, 2015).

This study evaluates a recent informational intervention designed to help students and their families make more informed college decisions. In 2012, the Obama Administration announced the release of the financial aid shopping sheet, a simplified financial aid award notification intended to help students better understand and compare costs and aid across colleges. The shopping sheet is now used by more than 3,000 postsecondary institutions (ED, 2015). In addition to simplifying information about costs and aid awards, the shopping sheet includes information about how a college compares to others in graduation and loan default rates, providing a reference point by which students can evaluate outcomes for the average student at the college.

Data over a seven-year period (2008-2014) come from the National Center for Education Statistics’ Integrated Postsecondary Education Data System. The sample consists of 648 public colleges that award primarily associate’s degrees and participate in the federal student loan program. Just over 10% (N = 67) of sample colleges adopted the shopping sheet in 2012. Outcome variables are measures of borrowing from both federal and non-federal sources: 1) the percent of students who borrow, and 2) the average amount borrowed. The independent variable of interest is an interaction of whether a college adopted the shopping sheet and post-implementation years. I controlled for a number of factors likely to influence both a college’s decision to adopt the shopping sheet and borrowing, including tuition and fees, average amount of grant aid per student, percent Pell enrollment, graduation rate, and full-time enrollment.

Preliminary results from a difference-in-differences analysis demonstrate that the shopping sheet had a limited impact. Findings indicate a small decrease in the share of students who borrowed federal and non-federal loans at two-year colleges that adopted the shopping sheet, but the effect was not statistically significant. The direction of coefficients for borrowing may indicate some substitution away from non-federal loans toward federal loans at shopping sheet colleges, but the effects were not statistically significant.

I will continue to explore the relationship between federal and non-federal borrowing. I will also examine whether borrowing patterns were different at colleges with higher (or lower) graduation and loan default rates relative to other colleges.