Navigating Higher Education Insurance: An Experimental Study on Demand and Adverse Selection
Year: 2024
Type: report
Abstract: We conduct a survey-based experiment with 2,776 students at a non-profit university to analyze income insurance demand in education financing.We offered students a hypothetical choice: either a federal loan with income-driven repayment or an income-share agreement (ISA), with randomized framing of downside protections.Emphasizing income insurance increased ISA uptake by 43%.We observe that students are responsive to changes in contract terms and possible student loan cancellation, which is evidence of preference adjustment or adverse selection.Our results indicate that framing specific terms can increase demand for higher education insurance to potentially address risk for students with varying outcomes.A randomized controlled trials registry entry is available at https://www.socialscienceregistry.org/trials/8936
DOI: 10.3386/w32260
Institutions: Brigham Young University, National Bureau of Economic Research, Providence College, Appalachian State University, United States Air Force Academy, University of Tennessee at Knoxville, Jain Family Institute, Stanford University, Federal Reserve Bank of Philadelphia, Federal Reserve, The Graduate Center, CUNY, City University of New York
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W4393359014