Research Brief
Loan Summaries
Nudging Students Toward Smart Borrowing

As students increasingly rely on student loans to finance part or all of their college education, the need for relevant, timely information to help make informed borrowing choices has become more critical than ever. Students themselves are indicating a need for such initiatives; 48% of surveyed borrowers reported either not knowing or incorrectly estimating the amount they have borrowed. The ramifications for borrower confusion can be significant. When students do not invest in or avail themselves of existing loan counseling resources, those students, as well as schools and society at large, suffer from the effects of over borrowing, lower degree attainment, increased attrition, and student loan default.

A number of schools and states, however, have used a simple yet innovative approach to help students actively manage loan debt as they progress toward degree completion. These institutions use loan summaries, sometimes called “debt letters,” to keep students apprised of their borrowing levels and allow them to make informed choices about future repayment scenarios. This brief explores the mounting research that has emerged to support the effectiveness of this strategy and examines institutional case studies that illustrate implementation techniques and the positive implications loan summaries have on not only borrowing behavior, but also academic outcomes.


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