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Last modified: Thursday, June 21, 2012

IU launching program to help students manage college debt

June 21, 2012

GARY, Ind. -- Indiana University is rolling out a comprehensive program on student financial literacy, aiming to give students the tools to complete college without burdening themselves with excessive debt.

MaryFrances McCourt

MaryFrances McCourt

Print-Quality Photo

The program, designed for students at all IU campuses, will include a dedicated website with information and tools on financing college, workshops, seminars and peer-to-peer advising for students who want individualized advice on avoiding or managing indebtedness.

"We recognize that student debt can be an issue, and it will be a top priority of the university to help students make smart choices when it comes to borrowing money and managing debt," said IU Treasurer MaryFrances McCourt, who led a university-wide committee that developed the program.

McCourt explained the program today to the Finance and Audit Committee of the IU Board of Trustees.

The program addresses national concerns about student debt, which has been rising rapidly in recent years because of a variety of factors. Student loans have topped $1 trillion and have surpassed credit cards as the largest source of unsecured consumer debt, according to the U.S. Department of Education.

Across IU, a majority of students borrow money to help pay for college. The percentage who borrow and the amount they borrow vary somewhat between campuses. For example, slightly less than half of IU Bloomington students have loan debt.

When used appropriately, college loans enable students to earn a degree that may significantly increase their lifetime earnings. But the university recognizes that students sometimes borrow more than they need, or take out loans with excessive interest rates. They often lack a clear understanding of what their loan repayment rates will be and whether they will earn enough money to repay their debt.

McCourt said the program will be targeted especially to students who need the most assistance. That includes students with excessive debt and those who are not making satisfactory academic progress as indicated by low grade-point averages, low course-completion rates and other factors.

The initiative will focus on helping students make smart choices, reflecting the fact that students can benefit from more tailored and individualized advice. It will include short, medium and long-term initiatives, designed through research and focus groups with students on five campuses.

Components expected to go into effect this summer include presentations for students and parents at first-year orientation and a dedicated website with links to references and tools for understanding and managing debt. Also, the university will develop academic courses, targeted seminars and flexible workshops to help students understand issues related to debt and borrowing.

Eventually, peer-to-peer counseling will be added to help students talk about personal financial issues in a comfortable setting, and programs can be designed for graduates who need to start repaying loans.

Additional components will include clearer information on college costs, annual statements that tell students how much they have borrowed and how much they will have to repay, and improved metrics for identifying students who are at risk of excessive borrowing or not making academic progress.

The program was developed by a task force made up of McCourt; Ken Carow, associate dean for research and programs, IUPUI; Rachel Delbridge, financial aid counselor, IU Southeast; Jim Kennedy, director of university financial aid; Phil Schuman, graduate assistant, IU South Bend; Sarah Soper, director of financial aid and scholarships, IU East; Jack Tharp, vice chancellor of student affairs, IU Kokomo; and Kurt Zorn, associate vice provost for undergraduate education, IU Bloomington.