One of the reasons the student loan repayment plan at Yale did not work was because:

Question

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Adverse selection occurs when participants in a program are self-selecting and those who are more likely to benefit from the program opt-in while those less likely to benefit opt-out. In this case, it is likely that students who expected to have difficulty repaying their loans were more likely to enroll in the program, leading to adverse selection. This can make it difficult for the program to sustainably finance itself if the costs exceed the funds collected through repayments.

One of the Reasons the Student Loan Repayment Plan at Yale