How does information in financial aid award notifications affect enrollment and borrowing decisions?
Rosinger, Kelly Ochs
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US higher education couples high tuition levels with targeted financial aid to support college enrollment. This finance model is complicated, and students – particularly low-income students – often lack complete information about costs and aid. Recent research, policy, and advocacy attention has turned to simplifying the financial aid system and providing information to students as they navigate the system in efforts to more equitably and efficiently deliver aid. One way to reduce complexity is for colleges and universities to provide financial aid award notifications communicating costs and financing options. Yet such notifications have proven difficult to interpret. In 2012, the US Department of Education and Consumer Financial Protection Bureau released a model award notification, or “shopping sheet,” intended to simplify and standardize information about costs and aid. More than 2,000 institutions have adopted the shopping sheet for some or all students, and legislation has been introduced that would require institutions to use a standardized format in awarding aid. However, we know little about how these recent policy efforts influence educational decisions. This study used a randomized controlled trial at a public university and drew on human capital theory and behavioral economics to examine how the shopping sheet affected enrollment and borrowing decisions, paying particular attention to low-income students who face the greatest informational barriers. A sample of admitted and currently enrolled students was randomly assigned to treatment and control conditions. Students in the treatment group received the shopping sheet in addition to the participating university’s traditional notification; students in the control group received the institution’s traditional notification. The experiment was conducted in spring/summer 2013; enrollment and borrowing was observed during the 2013-2014 academic year. Findings demonstrate that receipt of the shopping sheet had a limited effect on enrollment and borrowing decisions. Likewise, enrollment and borrowing decisions of low-income students were not more sensitive to receipt of the shopping sheet than those of their higher-income peers. This research aims to contribute to our understanding of how information shapes educational decisions and inform federal policy efforts to standardize and simplify financial aid award notifications.