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IU student loan volume continues to fall

IU’s total student loan volume has fallen over the last academic year, continuing a downward trend across all campuses.

The overall volume, including federal loans, private loans and loans provided by IU, fell by 2.53 percent or $13.6 million between the 2016-2017 and 2017-2018 school years, according to data released by the U.S. Department of Education and the University. The total amount of federal loans has dropped by $146 million over six years, the private and external loan volume has increased by $19.7 million.

However, the overall student loan amount has decreased over the last six years, from $651 million in 2011-2012 to $524 million in 2017-2018.

“We just hate to see any student to leave here with excessive student loan debt,” said James Kennedy, associate vice president of University Student Services and Systems.

Kennedy said the University began to focus on decreasing student loan debt six years ago after talking with IU students about financial issues.

“One of the questions we would ask students was, ‘How much student loan debt do you have?’” Kennedy said. “We soon realized that many students didn’t know.”

In 2011-2012 school year, students took out $613 million in federal loans, $37.3 million in private loans and $348,643 in IU loans.

In response, Kennedy said the University began to develop programs and initiatives that would improve financial literacy, financial aid understanding and four year completion rates for students. 

IU began sending out in 2012 an annual letter to students that details the recipient’s total loans and estimates his or her repayment amount. Kennedy said the University also began encouraging students to complete their degrees in four years to reduce loan debt.

To improve financial literacy, Kennedy said the University began its MoneySmarts program through the Office of Financial Literacy. 

Phil Schuman is the director of the Office of Financial Literacy, but he said staff likes to describe it as a financial wellness office. 

“We don’t just tell you what the best thing with your money is,” Schuman said. “We also take into account who you are as a person and figure out what might make the most sense for you.”

MoneySmarts teaches five week personal finance classes as well as a three credit semester course. The program offers a college cost calculator as well as videos, articles and podcasts about financial literacy on its website. Students can also schedule an individual meeting with financial consultants through the office.

“Student loans are not a bad thing by any means,” Schuman said. “We want to see students be as efficient with them as possible, so that they’re only borrowing the amount that they need and not just the amount of money that’s being offered to them.”

In the 2017-2018 school year, students took out $467 million in federal loans, $57 million in private loans and $436,201 in IU loans. 

Besides being efficient with student loans, Schuman said he also suggests students save money they earn over the summer to pay for tuition and fees in the fall. Students should also consider working during the school year to pay for personal expenses instead of taking out loans to pay for them.

“With those personal expenses, we don’t want you to have to spend money and then pay it back over the course of 10 years,” Schuman said.

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