Doubling Career Track Course Completion Rates Using Behavioral Science

Imagine you can increase your salary by $15-20k per year. You just need to take a training course. These cost around $5,000 and you only need to pay for the course after you land the job. Then, and only then, will you need to start repaying the training cost.

Merit America provides these training courses. They help low-wage workers land higher-paying jobs via their in-depth programs. The training programs cost $0 upfront, but you are required to sign up for a loan that commits you to pay later, when you get the job. It’s a good deal ($0 upfront with downside protection) but also a bit unusual. Merit America* has to explain to students that they are actually signing up for a loan with another organization. Then the student will need to sign paperwork and commit to paying back the loan after they land the job. To students, this can all feel scary (and confusing). Also, loans are inherently scary.

This realization prompted a partnership with Irrational Labs. Merit America asked us to help them ensure that payment is not a barrier for people interested in starting the program. Our team made a series of changes throughout the student journey, and the resulting interventions drove a 100% increase in course completions.

* While Merit America does not directly offer or promote loans, their program enables access to a zero-percent interest loan for students through another organization.

The Challenge

Can we increase the number of people who start the training programs?

Hypothesis: Improve the loan paperwork process upfront

Students were excited about the training programs. Then they froze. When confronted with the loan details, they often experienced decision paralysis. When would they have to pay it back? Did they owe anything now? What if they didn’t get a job? The answers to these questions were unclear.

We needed to present complicated information in a way that was cognitively and emotionally digestible for students, particularly during their initial engagement with the program.

How could we let students know about the requirement to apply for a loan without causing fear or overwhelm that could lead to program dropout?

The Solution

Simplify the Process Through Behavioral Interventions

We reimagined communications around the payment process through the lens of behavioral science. Our diagnosis leveraged insights from staff interviews, material review, and immersion.

Step 1: Behavioral Diagnosis

We assessed how Merit America introduced the topic of payment, including the loan. We identified key barriers:

• Ambiguity: The process was long and contained lots of financial jargon. When faced with a complex, risky or uncertain decision, people sometimes choose to defer making the decision or opt out of the decision entirely.
• Cost was salient: Loan options were framed as “payment” decisions. This set the mental model that students would have to pay upfront and triggered negative emotions like fear and uncertainty.

Step 2: Identify the Psychologies at Play

We identified the key psychological barriers as:

• Cognitive scarcity: People were receiving information about the loan process when they were already cognitively burdened (busy, making many other decisions, and receiving lots of other information at the outset of the program) thus limiting their ability to optimally consider their financing options.
• Present bias: People tend to experience present bias, valuing present costs/benefits more highly than those in the future. Students’ present bias led them to undervalue future benefits of the program due to immediate perceived costs or efforts associated with the loan process.

Step 3: Behavioral Design

So, what did we do next to increase commitment to payment, including loan completion?

Redesigned Timing

We identified optimal moments to introduce payment and the loan process, aiming to ensure that information was delivered when students were most receptive and able to act on it. By carefully choosing these moments, we aimed to minimize cognitive overload and increase the perceived benefits of determining a payment solution:

• Letting people know about the loan process and other payment options at the time of application in order to prevent situations of distrust in the future.
• Asking people to pre-commit to completing the loan application at the time of application as well as asking them to verify that they meet application requirements.
• Providing a dedicated time during the program to complete the loan paperwork and ask questions about payment as needed.
• Enforcing a deadline that is prior to the actual deadline to encourage early action.

Simplified the Process

We used several behavioral principles:

• Reducing ambiguity: People tend to favor the known over the unknown. Feeling uncertain about an outcome or action is more aversive than experiencing a negative outcome and can lead to inaction.

To make the lender’s loan repayment information more concrete, we revisualized the repayment timeline for students at the time of application. Importantly, this visualization helps to make salient that actual loan repayment would not begin until after the course was completed.

• Chunking: People are more likely to process information that is “chunked” into smaller pieces. To encourage behavior, break up a harder-to-perform behavior into smaller, manageable steps.

We designed a checklist for the loan provider around completing the loan application process, enabling people to check off each completed item to make progress salient. Ask people to complete one small step at a time rather than giving a longer period of time to complete the entire loan application.

• Salience: We notice things that stand out—things that are funny, bizarre, or visually unique.We redesigned the application to limit salient information to the things that are most important to students:
  • How much does the program cost?
  • When would they start paying the loan back?
  • Who qualifies for the loan?

• Communication strategy: We conducted a thorough audit of existing communications to pinpoint areas for improvement. This led to a series of recommendations aimed at making payment-related information more accessible and understandable through strategic changes in website content, email communications, and social media messaging.

The Impact

Completions doubled

Post-intervention results were significant, with course completions for the September Data Analytics cohort doubling (100% increase, with 42% completion vs. 21% before). This not only reflected a direct improvement in student retention but also underscored the potential of behavioral science to simplify complex processes to enhance user engagement and completion rates.

Reflections and Future Direction

Looking ahead, Merit America is exploring further applications of these principles across other aspects of their programming, aiming to empower more learners with accessible and impactful educational opportunities.

The project showcases the successful application of behavioral science to not let the fear of payment get in the way of pursuing the program. It also serves as a blueprint for other educational institutions facing similar challenges. By focusing on the student’s experience and reducing cognitive barriers, Irrational Labs and Merit America have set a precedent for innovative solutions in education financing.

Want to learn more about this work, or to partner with us to leverage behavioral science to solve your toughest financial services or other product problems? Contact us at [email protected].