Will Indiana pass the student loan debt exam?

State officials ramping up dialogue on Hoosiers’ growing dependence on borrowing for college, presenting an opportunity to showcase our unique resources

How to pay for college is like perpetually cramming for a final exam, both defined by lofty expectations yet underpinned with stress. Dialogue on reducing Hoosiers’ soaring dependence on student loans is ramping up and shedding light on existing resources to make higher education more affordable.

But will we pass the exam?

At its most recent meeting on Dec. 13 the Indiana Commission for Higher Education placed a renewed emphasis on financial literacy and increasing the number of Hoosiers who complete college on time and with minimal debt, even convening a task force at the meeting to discuss the issue. The commission’s action is applauded and timely.

A recent report by The Institute for College Access & Success, a non-profit independent advocacy group, paints a sobering picture. Indiana now ranks 11th highest in the nation for average student debt at $27,500. Sixty-three percent of the 2011 graduating class in Indiana have loans.

It doesn’t have to be this way.

Outreach must begin well before freshman orientation in college. Changing the collective mindset from paying for college to planning for college must take root early in the minds of students, families and education leadership. It holds the key to reducing the dependence on debt and minimizing Indiana’s student loan default rate, which has increased 35 percent over the past three years, according to the commission.

The tools exist to begin shifting our focus from borrowing for higher education to preparing for the financial demands of post-secondary life, which can be accessed with a few clicks of a computer mouse. But too few students and families are aware or take advantage of them, leading to a loan as the main option. A study cited by the Chronicle of Higher Education indicates 65 percent of college-bound seniors this year failed to use any financial planning tool when researching the cost of college.

As a member of the commission’s panel, I am encouraged by the acknowledgement that student loan debt is a modern problem that requires modern solutions. My organization conducts more than 150 free workshops and seminars at schools across Indiana each year that focus on making educated choices in planning for college, including how to pay for it. Watching students crunch the numbers on our real-time online resources and realize they can actually afford a preferred school, to see that light bulb go off, never gets old. And it’s contagious. But it doesn’t happen enough.

Indiana’s future is at stake. Of the 930,000 projected job vacancies by 2018, 506,000 are for those with post-secondary credentials, according to the commission, citing U.S. Bureau of Labor statistics. Yet less than one-third of Indiana’s four-year college students and only 4 percent of the state’s two-year students graduate on time – student loan debt being one of the big reasons why. The lifetime earning potential of a student who does not complete higher Educational loan is roughly $1 million less than a college degree-holder. To remain competitive nationally and globally, Indiana’s workforce must hit the books.

Two themes became clear from the Dec. 13 panel discussion: Addressing college loan debt must be a priority and it must happen early. What has been done with baby steps now requires giant leaps. For instance: Preparation for the Free Application for Federal Student Aid (FAFSA), which is required for students to be eligible for any state or federal financial aid program, often begins only a few months before the March 10 deadline. Why not begin discussions earlier in the school year, even the year before, allowing students and families to think more critically and make better decisions?

Indiana college tuition and fees have outpaced Hoosier earnings growth more than 100 to 1 over the past decade, according to the commission. The Institute for College Access & Success reports two-thirds of college graduates in 2011 nationwide had loans.

It doesn’t have to be this way.

Changing the collective mindset from paying for college to planning for college bodes well for Indiana’s future and lessens Hoosier families’ dependence on soaring college debt.

Source: https://www.ismloans.org/2013/04/will-indiana-pass-the-student-loan-debt-exam/