Indiana colleges will provide students clear and useful information about their loan debt with new “truth in borrowing” legislation effective in 2016.
New state law requires Indiana’s public and private colleges to provide yearly information to all students with college loans—including total estimated debt and estimated monthly payments after graduation.
The Commission for Higher Education estimates in its Return on Investment report that the average debt for a Hoosier graduate with a four-year degree is $27,000 and $17,000 for graduates with two-year degrees.
The law was inspired by the success of a similar effort at Indiana University. After just two years of sending annual letters to all student borrowers, IU officials estimated undergraduate student borrowing decreased by almost 16 percent, amounting to approximately $44 million in student savings.
The law requires public and private colleges to send the following data to students with debt on an annual basis beginning in June 2016:
- Estimated total amount of student loans (principal)
- Estimated total amount the student will have to pay (principal + interest)
- Estimated monthly repayment amount
- The percentage of the cumulative federal borrowing limit a student has reached