Increasing post-grace period loan payments by student borrowers

What was the challenge?

Federal student loan borrowers who miss initial loan payments are in danger of defaulting on their loans. To assist these borrowers, ED’s Office of Federal Student Aid (FSA) ran an email campaign to determine whether having FSA send reminder emails to borrowers—in addition to the communications from loan servicers they already receive—could help borrowers get back on track after missing their initial payments.

What was the program change?

We designed emails using proven insights that included simplified language, a clarification of the relationship between borrower and loan servicer, and linking directly to the login page to make payments.

How did the evaluation work?

The project proceeded in two phases. In the first, FSA identified an effective subject line by randomly sending different subject lines to four groups of 12,500 borrowers each and comparing open rates. In the second phase, the remaining 77,115 borrowers were randomly selected to either receive emails using the winning subject line, or were sent no communications from FSA at all. Payment rates for all groups were tracked.

What was the impact?

In the seven days after the emails were sent, 3.5% of borrowers who were sent an email made at least one payment compared to 2.7% percent of the control group. This difference persisted: more than three months after the emails were sent, the fraction of those groups having made a payment had risen to 16.6% and 16.0%, respectively.