Higher Ed Commission Joins Efforts To Reduce Student Debt

As student debt continues to climb across the country, state officials and institutions in Indiana are taking steps to help student figure out how to best manage their loans.

As we’ve reported, the General Assembly passed a law during the 2015 “education session” to better inform college students about their debt load. House Enrolled Act 1042, authored by Rep. Casey Cox, R-Fort Wayne, requires public and private colleges and universities across the state to provide annual information to all students receiving loans, specifically those participating in the 21st Century Scholars program or receiving Frank O’Bannon scholarships – both state funded programs.

Beginning in June 2016, schools will be required to send estimates of the following data on a yearly basis:

• Total amount of student loans
• Total amount the student will have to pay (principal + interest)
• Monthly payment amount
• Percentage of the cumulative federal borrowing limit a student has reached

State officials hope a new law requiring colleges and universities to communicate with students about their debt repayments will make things easier on both parties. (Photo Credit: 401(K) 2012/Flickr)

Indiana University has already been sending student borrowers this type of letter since 2012, and the school has seen much success. IU officials estimate undergraduate debt system-wide has decreased by over 12 percent – close to $31 million.

To help institutions fulfill this new “truth in borrowing” requirement, the Indiana Commission for Higher Education has released new guidance, as well as templates for those student letters.

Higher Education Commissioner Teresa Lubbers says she hopes the materials will provide further clarity for schools, to allow them to help Hoosier students be more responsible with paying for school.

“As we call upon Indiana’s colleges to keep tuition increases to an absolute minimum, we must also make sure students make informed decisions when they borrow to pay for college,” Lubbers said in a statement. “Providing students…an easy-to-understand breakdown of their debt responsibility is a small step that will help thousands of Hoosiers graduate with less debt.”

The Commission estimates Hoosier graduates leaving school with a four-year degree shoulder an average debt load of $27,000. That amount sits closer to $17,000 for students graduating with two-year degrees.

Indiana ranks near the top of the list when it comes to student debt across the country. Nationwide, the average student owes $28,400 after college, according to data from the Institute for College Access and Success.