How Indiana University Cut Student Debt

Troubled by an increase in student loan defaults, Indiana University decided to tell prospective borrowers what their monthly payment would be after graduation and how much they would owe. That information had a dramatic effect on students’ willingness to borrow: Federal undergraduate Stafford loan disbursements at the public university dropped 11 percent, or $31 million, in the nine months that ended March 31 from a year earlier, according to U.S. Department of Education data. “We are having more contact with the student where they can say, ‘I don’t want this’ or ‘I want less,’ ” says Jim Kennedy, associate vice president and director of financial aid at the Indiana system. “If they know at all times their debt and the repayment, it helps with a lot of planning.”