Professor of Public Policy and Economics, University of California, Berkeley
Title: Demystifying College Costs: How Nudges Can and Can’t Help (Joint Work with Elizabeth Linos and Vikash Reddy)
Abstract: As college costs continue to rise across the US, governments have quadrupled the amount of financial aid available to students. Yet, the administrative process of receiving financial aid remains complex, both raising costs for families and leading high-achieving students to forgo college even when aid is available. In two large-scale field experiments (N= 265,570), we test the impact of nudging high-school seniors in California to register for State financial aid — a process that unlocks over $2 billion of financial aid for low-income high-achieving students each year. We find that both simplifying communication and affirming belonging in letters significantly increase compliance with the proximate step, signing up for an account, by 9% and 11% respectively. Yet, these nudges alone are not effective at impacting the final step of the long financial aid process — college enrollment. In contrast, a simplified letter that affirms belonging while also making concrete and comparable cost calculations more salient significantly impacts college choice, increasing enrollment in the lowest-cost option by 10.4%. Our findings suggest that different nudges are likely to address different types of administrative burdens, and their combination may be the most effective way to meaningfully shift educational outcomes.