Two Montana State University professors, who recently garnered national attention for their research on how making college students aware of their debt load affects their borrowing behavior and performance, are embarking on a new study in partnership with the Montana Office of Public Instruction.
Christiana Stoddard, an associate economics professor, and Carly Urban, an assistant economics professor, both in MSU’s College of Agriculture and College of Letters and Science, are partnering with the Montana OPI to study how high school classes in financial education affect the way students pay for college.
The partnership is the result of a three-year, nearly $3.5 million federal grant awarded to the Montana OPI to develop a state database of educational data, and is part of the U.S. Department of Education’s efforts to encourage data-driven decision-making for better student outcomes.
The researchers have been awarded $252,000 of the grant to study whether students who were exposed to financial education in high school are more likely to make better financial aid and loan decisions as they head for college.
“We want to know, ‘Do they take out more appropriate loans? Do they figure out other ways to finance their education? Are they more likely to fill out the FAFSA (Free Application for Federal Student Aid) to apply for financial aid?’” Stoddard said. “If we find that students who take financial education classes are making better decisions later on in terms of their financial aid, then that tells all schools that this is a great policy.”
While Montana doesn’t require school districts to provide financial education unlike some other states, Urban said the schools that do offer financial education have a well-developed curriculum developed by the University of Arizona’s Take Charge America Institute.
“We have information on which schools are offering it and will be looking at what types of students are taking these classes,” Urban said. “Are they the high achievers who may already know this stuff, or is it the lower achievers who have never gotten that information before, or is it students who don’t want to take another math class, so they decide to take financial education?”
Urban said they will also be taking into consideration the rural-urban makeup of the state.
“There are parts of the state that are really rural, where people might not have a lot of access to information about banking or loans or how credit markets work, and you might see different effects in those areas than in more urban areas,” she said. “And, since Montana does have so many different areas, I think it’s useful for other states to look at us and get more of a sense of how important it is for which kinds of students in which kinds of areas."
The duo also received $35,000 from the Spencer Foundation for a one-year study building on their research on how borrowing affects academic performance among students.
“We will be examining how financial aid decisions affect a student’s college performance and completion, and things like choice of a major,” she said. “And, if a student chooses a different financial aid package are they more likely to go into the public sector because there are incentives for that? Or are they more stressed out by their loans that they drop out sooner?”
Urban added that compared to other states, Montana is ahead of the curve with its higher education data, especially regarding student financial aid and loan amounts.
“The interesting thing is no one has student loan financial aid packages for individual students in any administrative sense anywhere in the nation,” she said. “The Department of Education has access to it, they just haven’t put it together. Our plan to put it together will be a big contribution to this area of research.”
With the U.S. Department of the Treasury, the Consumer Financial Protection Bureau and other stakeholders keeping an eye on their research, Stoddard and Urban are continuing to follow the data to learn more about the impact of financial aid education on borrowing, and how debt loads affect student success.
“Our ultimate objective is to help students make better decisions so they’re more likely to finish college or less likely to default of their loans,” Stoddard said. “So, it’s figuring out the ways that policymakers or universities or high schools can influence the decisions students make. We don’t want to discourage students from going to college or taking out student loans, but we do want them to learn to make the optimum decision.”
Research by Stoddard, Urban and Maximilian Schmeiser, a former senior economist with the Federal Reserve Board, was featured on national television by Brendan Greeley, senior correspondent at Bloomberg News and co-anchor of Bloomberg Television’s “Bloomberg Surveillance.” Greeley highlighted their paper, “Does Salient Financial Information Affect Academic Performance and Borrowing Behavior among College Students?” in the Bloomberg Markets segment of the show.
Chris Stoddard, firstname.lastname@example.org, (406) 994-5634 or Carly Urban, email@example.com, (406) 994-2005