Student Debt Trap on P2P Lending Platforms: A Structural Equation Modeling Approach

The rise of Peer-to-Peer (P2P) lending platforms has provided students with alternative financing options. However, this convenience comes with the risk of over-indebtedness, which can have long-term financial repercussions. This study explores the factors contributing to student over-indebtedness on P2P lending platforms. Specifically, it examines the roles of financial stress and repayment behaviors in exacerbating this issue. The primary aim of this research is to understand how financial stress and repayment behaviors influence student over-indebtedness. A Structural Equation Modeling Approach was employed, using purposive sampling to select student participants. The findings indicate that financial stress significantly and positively influences student over-indebtedness on P2P Lending platforms. Similarly, repayment behavior also has a significant positive effect on student over-indebtedness on P2P Lending platforms. The study highlights the critical need for targeted financial education and support mechanisms to help students manage their finances effectively and avoid the pitfalls of over-indebtedness on P2P lending platforms.