First Faculty Advisor
Second Faculty Advisor
student loans; student debt; marketing deception
Marketing from student loan servicing companies tend to omit important information, thus deceiving borrowers. These companies may be taking advantage of students' position as vulnerable consumers with limited information to maximize their own profits. This study explores the relationship between deceptive advertising from student loan servicers and its effects on consumer perceived deception, student trust in the loan servicer, and student satisfaction in their borrowing decisions. Consumer perceived deception (CPD) is the extent to which a consumer believes the ad they were exposed to tends to mislead them. To test the hypotheses, an experiment was conducted, and a questionnaire was distributed. Participants were randomly divided into two conditions (deceptive and honest advertisements) and asked questions to determine their CPD, trust, and satisfaction. To test if learning they had been deceived further increased CPD and decreased trust and satisfaction, participants were then told if their ad was deceptive or not and asked to rate it again. Data was analyzed using one and two factor analysis of variance (ANOVA). Results showed a statistically significant increase in CPD in the deceptive ad condition, but results were not significant enough to confirm the other relationships. These results suggest that marketing from student loan servicing companies that omit information make students feel as if they have been deceived. The effect of this perceived deception is unclear. Further research could be conducted to determine if CPD has negative effects on constructs other than the ones examined in the present study.