Indiana University financial literacy effort pays off in fewer borrowers, less debt
FOR IMMEDIATE RELEASE
BLOOMINGTON, Ind. -- Fewer Indiana University students are borrowing this year to pay for school, fulfilling a goal of the university as it continues to focus its efforts on college affordability and student financial literacy.
Across seven IU campuses, the number of undergraduates who took out federal loans in 2013-14 decreased by 12 percent from 2012-13, and the money they borrowed fell by the same percentage. Four campuses saw double-digit decreases in borrowers and loan amounts.
"We are highly committed to student affordability and success and have a keen focus on student debt levels," said MaryFrances McCourt, IU vice president and chief financial officer. "We are thrilled to see such a significant decline in student debt, and we will continue to invest in financial literacy, seeking to ensure our students are equipped to graduate with as little debt as possible."
Indiana University created an Office of Financial Literacy in 2012, launching programs to raise awareness of the risk of excessive borrowing and help students make smart decisions about money. Changes in business practices also were instituted, creating more transparency about the cost of debt.
With the programs implemented this academic year, student borrowing declined at all campuses. University-wide, the number of students who received subsidized or unsubsidized federal loans decreased by 8,345, and the money they borrowed fell by $33.9 million.
Borrowing decreased even though overall IU undergraduate enrollment remained flat and there was no apparent change in students' financial need. This suggests students are finding ways to hold down overall expenses and declining to accept loans they don't need to pay college and living costs.
The effect was especially significant at IU Northwest, where students borrowed 27 percent less than in 2012-13, and at IU South Bend, where borrowing declined by 20 percent.
Figures by campus, with comparisons of 2013-14 to 2012-13, include;
- IU Bloomington: 18,982 borrowers, down 11.8 percent; $73.8 million in loans, down 10.5 percent
- IUPUI: 21,504 borrowers, down 11.7 percent; $86.2 million in loans, down 11.5 percent
- IU East: 3,181 borrowers, down 4.3 percent; $12.6 million in loans, down 7 percent
- IU Kokomo: 2,756 borrowers, down 2.9 percent; $10.8 million in loans, down 2.4 percent
- IU Northwest: 4,525 borrowers, down 22.8 percent; $17.6 million in loans, down 27.4 percent
- IU South Bend: 5,308 borrowers, down 17.4 percent; $20.5 million in loans, down 20.2 percent
- IU Southeast: 4,703 borrowers, down 5.4 percent; $18.4 million in loans, down 5.7 percent
In January 2013, Indiana University launched its MoneySmarts website to serve as a portal for financial literacy programs. The site provides a basic online primer about managing money, podcasts on specific financial literacy topics and calculators to help students with budgeting and loan repayment plans.
Ken Carow, associate dean of the Kelley School of Business at Indiana University-Purdue University Indianapolis, led a yearlong initiative to create three one-credit courses focusing on personal financial management skills. About 200 students enrolled in the courses on five campuses last fall.
Starting with the current academic year, 11,000 new students across seven campuses completed a 90-minute online learning module focusing on financial literacy basics such as budgeting, savings, establishing credit, borrowing and the time value of money.
IU Bloomington and IU Northwest have begun pilot programs of peer-to-peer advising, with junior and senior economics majors trained to answer questions and advise fellow undergraduates. Staff have also received training and attended workshops on personal financial management; and chancellors at regional campuses have appointed staff financial literacy teams.
In the area of business practices, IU instituted a standardized student aid letter that clearly separates grants and scholarships from loans and began mailing an annual "debt letter" telling students how much they have borrowed and what their expected loan payments will be. Also, changes were made in the calculated cost of attendance at some campuses, resulting in fewer or less generous loan offers.
Along with financial literacy, Indiana University has introduced initiatives to keep college affordable, including discounted summer tuition at IUPUI and the regional campuses; an increase at IU Bloomington in credit hours covered by the flat fee for full-time students; a Finish in Four program that freezes tuition for students on track to graduate in four years; and the lowest tuition increases in nearly half a century.
Total institutional gift aid for IU undergraduates has nearly doubled in the past five years, reaching over $140 million. Thanks to grants and scholarships, IU Bloomington has the lowest net average cost of attendance in the Big Ten.