1. Student loans, spending, and parental transfers: Insights from a nudge in student loan policy in the Netherlands.
- Author
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Been, Jim and Knoef, Marike
- Subjects
- *
STUDENT loans , *COLLEGE costs , *DEFAULT (Finance) , *HIGHER education , *ACADEMIC achievement - Abstract
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. [ABSTRACT FROM AUTHOR]
- Published
- 2023
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