📌 TL;DR
A simple message can reduce missed loan payments — not just for student loans, but for Buy-Now-Pay-Later (BNPL) debt as well. A 13-million-person experiment shows that repeating a simple message can significantly reduce missed payments on student loans. A similar Dutch study found the same for BNPL accounts. The key? Repeat the right message at the right moment.
The growing weight of missed loan payments
Loans can be useful — even necessary — but paying them off isn’t always easy. That’s true whether you’ve just left university or just bought something online with Buy Now, Pay Later. Many people fall behind, even with the best intentions. And when payments are missed, consequences snowball: fees, stress, and long-term financial harm. Although there are some people for whom missed loan payments are inevitable, many people could benefit from getting some help paying at the right time. According to this real-life study on 13 million people; a simple well-timed message can help hundreds of thousands of people avoid running behind on their debt repayments.
How this study reduced missed student loan payments
Most student loan borrowers stay on track, but the borrowers in this experiment — all 13 million of them — had already missed at least one student loan payment. That meant they were at real risk of spiraling into deeper financial trouble. On average, they owed $34,655 and were expected to pay about $340 a month. This group needed timely, effective support to get back on track.
The U.S. Department of Education partnered with behavioral scientists to test a key question: How can we help people take advantage of tools that are proven to reduce repayment problems?
Specifically, they wanted to promote two protective behaviors:
- Applying for an Income-Driven Repayment (IDR) plan — which lowers monthly payments so that it’s feasible for with one’s income and reduces default risk
- Enrolling in auto-debit — which prevents missed due dates through automatic payments and may also make people eligible for a small interest-fee reduction.
To find out what works, researchers randomly assigned borrowers to one of six email conditions (one of which was a control group), systematically testing:
- Message framing: “You can save $69 on your monthly payment” (dollar version) vs. “You can save 33% on your monthly payment” (percentage version)
- Number of suggested actions: promoting two behaviors(IDR and auto-debit) in the same email or in two separate emails
- Timing: with or without a follow-up reminder email 3 days later
Borrowers remained in their assigned group for the entire intervention period. This allowed the researchers to track how different messages — repeated over time — affected real repayment behavior. The goal was simple: reduce missed loan payments by nudging borrowers into IDR plans and/or auto-debit.
What worked best to reduce missed loan payments?
See the image below of the best working email that was sent in the 13-million-person study by Kuan et al. (2025).
✅ Emails designed by behavioral scientists:
All behaviorally informed emails worked better than the standard control email. They boosted applications for IDR plans, increased auto-debit signups, raised on-time payments, and reduced serious delinquencies.
✅ Percentage framing:
Saying “You can save 33% on your monthly payment” was more helpful than “You can save $69”.
✅ Two-action messages:
Emails that encouraged both IDR + auto-debit were more successful than sending separate emails for these actions
✅ Reminders:
Sending a reminder after was more helpful than not sending reminders
Together, these small tweaks had a serious impact on loan repayment behavior. If the best-performing email were sent to all 13 million borrowers, it could lead to hundreds of thousands more borrowers enrolling in an IDR plan, tens of thousands making a payment they otherwise wouldn’t, and tens of thousands more avoiding long-term delinquency. And all of that — from a simple, low-cost intervention.
How a simple SMS message can prevent BNPL debt: evidence from a Dutch study
The findings from Kuan et al.’s large-scale loan repayment study aren’t an isolated case. A similar experiment conducted in the Netherlands by the financial authority AFM (2025) and BNPL provider Riverty showed that a simple intervention — sending an SMS reminder on the day before payment is due— significantly reduced late payments. Among more than 34,000 customers, those who received an SMS were at least 20% less likely to be charged extra fees for late payment.
This intervention worked because it targeted the practical obstacles that often get in the way of timely repayment: forgetting the due date, not seeing the original email reminder, or not realizing the consequences of missing a payment. Just like in the student loan study, these nudges didn’t make people wealthier, but they did make it easier for them to pay their debt on time.
Importantly, the BNPL study also tested multiple message variations — from simple reminders to versions that included either a cost warning or a direct payment link. All versions were effective, though the one with the payment link was slightly more so. This supports the idea that well-designed, timely reminders — especially when personalized and action-oriented — can significantly improve real-world financial behavior.
What this means in practice
If you’re paying off a loan, try to make this easy for yourself. A small change — like enabling autopay — can make a big difference. If you’re a policymaker, loan servicer, or bank, this study shows that a simple message — if designed by behavioral experts — can reduce missed payments and support financial wellbeing at scale.
If you want to reduce missed loan payments, timing and framing matter more than you think. Don’t just send reminders informing people that they missed a payment. Make them clear, specific, and timed to fit the rhythm of people’s lives.
This study also carries a broader message: effective reminders are not created by accident. The most successful messages weren’t just friendly nudges — they were grounded in behavioral science and designed by behavioral experts. They used concrete language, aligned with people’s mental models, and removed friction to action. If you want to reduce payment problems — whether in student loans, BNPL, or beyond — bring behavioral scientists to the table. Their expertise can turn generic communication into measurable impact.
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Would you like to work with a behavioral expert on an intervention or sustainable behavior change? Check out my personal website to see what I do. Perhaps I can help out.
Related articles on the Behavioral Times
📚 References
Kuan, L., Blagg, K., Castleman, B.L., Darolia, R., Matsudaira, J. D., Milkman, K. L., & Turner, L. J. (2025). Behavioral nudges prevent loan delinquencies at scale: A 13-million-person field experiment. PNAS. https://doi.org/10.1073/pnas.2416708122
AFM & Riverty (2025). Klanten helpen om hun BNPL-rekening op tijd te betalen.
