By Max Bomber
INDIANAPOLIS – Students going back to college this fall will be greeted by more than just new classes and textbooks.
They’ll be getting more information about their student loans as well – all in the name of helping students make better decisions about their debt.
Under a law that takes effect July 1, colleges and universities will be required to provide students with specific information about their educational loans. The information will include:
- Loan totals: An estimate of the total amount of education loans the student has taken out.
- Total payoff amount: An estimate of the potential total amount the student will owe.
- Monthly repayment amounts: An estimate of the monthly repayment amounts that a “similarly situated borrower” might encounter, including principal and interest.
- Percent of borrowing limit reached: An estimate of how much more the student could borrow.
House Bill 1042, authored by Rep. Casey Cox, R-Fort Wayne, is projected to have just a minor cost that universities can absorb but make a big difference for students’ financial situations.
“I am still paying my student loans from law school,” Cox said.
He’s not alone. Americans are saddled with some $1.3 trillion in student loan debt. And Cox worries that student debt could be the cause of the nation’s next financial disaster.
In Indiana, students are graduating from four-year institutions with an average debt of $28,466, according to The Institute for College Access & Success. That ranks the state 16th highest in the nation.
The state law aims to help students make decisions that will keep those numbers down.
It’s modeled after a similar program at Indiana University’s Bloomington campus, where higher education officials say federal Stafford Loan disbursements have dropped 11 percent, or $31 million, in the nine months since it was implemented.
“If students see the impact their loans will have, it may persuade them to make more payments,” said Stephanie Wilson, communications director for the Indiana Commission for Higher Education.
The commission plans to provide colleges with a template letter for students; however HB 1042 does not require the commission to draft or monitor the annual letters. Beginning next year, participation in the program will be part of the standard agreement that institutions sign to be eligible for state financial aid.
Max Bomber is a reporter for TheStatehouseFile.com, a news website powered by Franklin College journalism students.