Date of Conferral







Anthony Lolas


There is a student loan debt problem in the United States. Seven million student borrowers are in default and another 14 million are delinquent on their loans. A high level of college loan debt leaves students with insurmountable payments and holds them back from starting a family, buying a home, or saving for retirement. The problem is that financial managers may not understand the student loan decision process well enough to help students make a loan decision that prevents an unmanageable level of debt. The purpose of this study was to explore and understand the student's loan decision process using a conceptual framework that contrasts rational choice theory and behavioral economics within the Blackwell, Miniard, and Engel's consumer decision model. This exploratory study was designed to answer research questions about how students perceived the forces that might influence the decision. A qualitative case study was conducted and purposeful sampling was used to identify 28 undergraduate students who had a student loan at a university in the Rocky Mountain region. The students were interviewed, the data coded, and the coded data were analyzed to identify themes. The data were used to diagram the decision process and identify decision variables. The findings indicated that students were pragmatic in their loan decisions, but they were not rational actors. The research highlighted 3 behavioral economic themes: the power of intention, herding, and complexity resulting in the use of the satisficing and default heuristics. The contributions of this study could be of interest to financial managers, parents of students, and students planning to enter college. Preventing unmanageable student debt could bring positive social change to the students and their families.