For our thesis in Design for Social Innovation at SVA, we are looking into how borrowers can develop a sustainable financial practice so that they do not default on their student debt. This presentation walks our audience through the larger issue, how we plan to scope it, some unmet needs and assumptions we have identified, and finally our plan moving forward as we get closer to designing a sustainable intervention. Please see our presentation notes and more information on our thesis at studentdebtbehavior.tumblr.com

1. Demystifying
Default
Unpacking Student Loan
Behavior and Default in
the United States
Laura Kadamus
Rhea Rakshit
October 13, 2014

2. 40 million
student loan borrowers share a debt burden of
$1.2 trillion

3. 14% of them are
expected to default.
That’s 5.6 million borrowers, approximately
the total population of Denmark.

4. Why is default a
problem?

5. It’s a problem for the borrower
credit score ruined
taxes withheld
wages garnished
stress and
anxiety

6. It’s a problem for the economy
SME market
housing market
public interest job
market
rising inequality

7. Why!
Federal Loans?

8. Why are so many
students
defaulting?

10. Here’s what we
heard.

11. “Changing plans is so
confusing - I never even
bothered.”
“I don’t tell people my
business. Student loan
payments should have been
the first thing on my mind, I
take full responsibility.”
Evan, Forbearance!
Bachelors + Masters
Rob, Delinquent!
Associates
“There is no communication.
They don’t make the process
easy. I learned everything on
my own.”
“I didn’t have a plan. I have
no clue how loans are
structured.”
“I was so stupid to have
borrowed so much money,
exactly the kind of stupid
teenager they prey on.”
Ari, Repayment!
Bachelors!
Lela, Default!
Drop Out
Francesca, Repayment!
Bachelors

12. “Financial stress is rarely
not somewhere in the
picture. Most students don’t
come in until a major
incident.”
Christine, Student Health,!
SVA
Joanne, Partner
Engagement, ASA
“Low income students don’t
have a good example on
how to navigate the loan
process.
Lynn, Debt Advisor!
SVA
“Small goals allow you not
to [get overwhelmed] think
about the big picture.”
Michael, Operations
Analyst, LearnVest Inc
Jonathan, Campus Engagement
& Education Consultant. ASA
“They are not thinking about
it until it’s down to the wire.”
Patty, Career Development,
SVA
“[Students] need to
track how much they’re
borrowing while they’re
in school so there are no
surprises.”
“Borrowers need to know there
are options out there. It’s in the
best interest of all stakeholders for
borrowers to be in a [suitable]
repayment plan.”

13. Here’s what we
learned.

14. Awareness + Accountability

15. Awareness
Low
Financial
Literacy

16. Awareness
Lack of
Clarity +
Financial
Jargon

17. Accountability
Behavioral
Biases

18. Accountability
Accurate
Profile of a
Defaulter

20. How might we encourage a
sustainable financial practice
among recent college
graduates, so that they do not
default on their student loans?

21. Hypothesis
Theory of Change

22. Why recent college
graduates?

23. Assumptions
People want to deal with their finances but they
don’t know how
Breaking down the decision making process
makes decisions less intimidating

25. Obligation Ownership

26. Next Steps
Prototyping and Testing:
Financial Literacy Formats
Collaborative Learning Methods
More User Research
Competitive Analysis
People and Organizations Reframing Interactions with
Money, ex. Reciprociti
People and Organizations Making Painful “Tasks”
Easier, ex. Commonbond

27. Thanks!