Why Are University Students Borrowing Too Much in Student Loans?: A Questionnaire Survey

Abstract

To explore why university students borrow significant amounts of money in student loans, we conducted a questionnaire survey including questions that assume a hypothetical situation in which a subject needs to borrow money for his/her school expenses. Our main findings are twofold. First, the subjects who chose to take out student loans underestimated their future risk of personal bankruptcy. Second, the amount of money that subjects chose to borrow depended on the form of the application documents. For example, when the form asked for an annual amount, they borrowed significantly less than when the form asked for a monthly amount.