Students using loans to pay for college might get some extra help when it comes to gathering information about their debt load if an Indiana House bill becomes law.
Universities would have to provide students with an annual report that details a total loan amount estimate, an estimate of interest rates and the amount of interest that will accrue, an estimate of monthly repayment amounts and the percentage of the borrowing limit the student has reached. The bill also protects institutions from liability concerning the information provided.
The bill would fill a gap that some students, including Kirsten Sidebottom, say is missing in the world of postsecondary education.
“I don’t think they do a great job about getting info out there,” said Sidebottom, a student at IUPUI.
If the institution does not provide the information to students directly, it can cause students to feel stressed, especially if they don’t fully understand how the process works, she said.
“It’s hard to know where to look for money when you need it,” Sidebottom said. “Even more so, trying to find the best ones with low interest rates or loans that are the best deal in the long run.”
Jim Kennedy, associate vice president and director of financial aid for the Indiana University system of IUPUI, said colleges need to ensure students have financial literacy.
“Any time we can take the time to talk to students about their debt, we need to do it,” Kennedy said.
He said colleges care about their students and don’t want to see them struggle with debt.
“Nobody wants a student to have increased debt or to default on a loan. That would be terrible,” Kennedy said.
Kennedy said he believes that colleges should be given flexibility to provide specific programs and initiatives to help their individual students.
The Indiana Commission for Higher Education also supports the legislation.
Commissioner Teresa Lubbers said in a written statement that finishing college on time will help students avoid problems with debt in the long run.
“Costs escalate unnecessarily when students take longer than they need and borrow more than they should,” Lubbers said.
Colleges have removed many of the “stumbling blocks” that cause students to remain in school longer than expected according to Lubbers.
“Our goal in Indiana is to ensure that more students complete postsecondary credentials on time and at the least possible cost,” Lubbers said.
While some colleges already have programs that teach students about loans, Kennedy believes educating students on debt is still key.
“I think the bill is good,” Kennedy said. “I think there has to be an increased emphasis on student debt.”
The Senate Education and Career Development Committee will hear the bill Wednesday afternoon.