Indiana’s state government has enacted a law mandating that all its colleges whose students can receive state aid must mail the schools regular disclosures of their student debt levels.
The law is based on an Indiana University policy. At the beginning of every semester, the school sends its students letters that state each student’s current debt, assumed monthly interest rates, monthly payment values and the projected value of accumulated payments.
Phil Schuman, Indiana University’s director of financial literacy, told the Chronicle of Higher Education that the disclosures are intended to deter students from “making a huge financial mistakethat could cost them dearly down the road.”
However, critics worry that the letters will discourage some students, especially those from low-income families, from attending college.
We feel that a more informed decision is a better one, and it does not make sense to criticize the law because it might deter some people from amassing debts they cannot pay.
However, this law must not become a way to blame students who choose to take out loans to pay for school. Many students who attend a four-year university can expect to graduate with some debt. If there were a better option, we believe students would take it.
In 2013, Minnesota’s level of average student debt was the fifth highest in the United States. Therefore, to help students make informed financial decisions, we encourage the Minnesota Legislature to enact a similar law.
