Why would anyone choose not to go to college? According to the US Census Bureau, college graduates earn almost twice as much as those with only a high school diploma over the course of their lifetime, and are significantly more likely to be employed.
But the reality is that not everyone finds it easy to make the most out of opportunities in higher education, despite significant financial support being available through grants and subsidized loans. According to the US Department of Education, less than half of low-income high school seniors who intend to go to college end up enrolling, and only one in twelve graduate with a degree by age 24.
How can we help them make better choices? Our new project “Nudging for Success: Breaking Behavioral Barriers in the Financial Aid System,” supported by the Bill and Melinda Gates Foundation and the Lumina Foundation, will explore how behaviorally informed interventions in the federal financial aid system can help to improve college outcomes.
Over 20 million undergraduates receive federal aid every year, and millions more are involved in pre-college counseling, post-graduate repayment, and other phases of the aid process. With so many people touched in so many ways, optimizing the federal financial aid system can yield huge benefits for those that need them the most.
From 2014 through 2016, ideas42 will run eight pilots that aim to improve how students and their families interact with the federal financial aid system. We hope that the “nudges” we design—subtle interventions that change aspects of the context in which people make decisions—will expand access to higher education, encourage successful completion of college studies, and support the repayment of student debt. The ultimate goals are to scale these interventions to other sites and to seed innovation in the policy conversation around higher education reform.
Small changes, big differences
In every stage of financial aid, “behavioral” barriers abound for students of low-income backgrounds. Navigating the complicated financial aid system is difficult for everyone, but most of all for first-generation students and people from low-income backgrounds who lack support networks. Failure often follows from factors that may seem trivial at first: the frustration of financial aid forms, the complexity of calculating loan repayment schedules, or the need to proactively seek advice.
Take, for example, the Free Application for Federal Student Aid (FAFSA). Filling out this multi-part form is more difficult than filing taxes, according to a 2006 study by academic experts Susan Dynarski and Judith Scott-Clayton. Another study, led by Eric Bettinger in 2009, found that low-income students who received simple assistance in filling out the FAFSA were much more likely to both submit the form and ultimately enroll in college. Applying is just the first step; each time low-income students encounter challenging circumstances in their environment, more of them drop out entirely.
ideas42’s work in other fields, from consumer finance to international development, has shown that optimizing the environmental aspects of the choices that we all make can significantly improve well-being. In our 2013 white paper, we made the case that such nudges can help students enroll and succeed in postsecondary education. Now, we will be testing that theory in the field by looking at the financial aid system at universities, colleges, and community colleges around the United States.
Sometimes, small changes can make big differences: to students’ education prospects, to their future careers, and to our society at large.