Making student debt more manageable

We long have argued that advanced education is vital for today’s modern workforce. In most cases, a high school education alone is not enough to meet the needs of employers.

At the same time, however, another issue has arisen that can thwart students’ efforts to get that training. They borrow to pay for their educations and then graduate with a debt load that is burdensome and in some cases unsustainable.

But there is help on the state national fronts — one in the form of a new state law and the other in the form of a national bill inspired by one Hoosier and authored in Congress by another.

In July, Gov. Mike Pence signed a bill that requires public universities to inform students in an email or letter every year about how much they owe in students loans. It was inspired by Indiana University, which started the practice in 2013, telling students how much they had borrowed, the interest rate and estimated cost each month after graduation.

The goal is to make sure students understand the future ramifications of what they will owe, so they don’t take out more loans than they need.

Meanwhile, at Purdue University, the school’s research foundation is seeking a partner to establish and manage an alternative way for students to receive financial aid without incurring burdensome debt. University President Mitch Daniels said income share agreements are a no-debt, low-risk option that can keep the cost of attending Purdue within the reach of all qualified students.

Under the plan, a student draws from an investment pool to get money to pay for tuition and agrees to repay with a portion of the student’s future income over a fixed period of time. Rather than accrue interest, payments adjust with the graduate’s income.

During testimony in March before a congressional panel on the Higher Education Act, Daniels talked about the concept. He then worked with Rep. Todd Young, R-Ind., to develop the Investing in Student Success Act, a bill introduced this summer that would ensure protection for students engaged in such an agreement.

These creative efforts will help students get the education they need and hopefully graduate without a debt load that would hang over them like a financial sword of Damocles.

Advanced education is vital for today’s worker and the modern economy. Making student debt more manageable will make that more likely.

Under the bill, students would have to make payments only if they earn more than $18,000 a year. Payments can’t exceed 15 percent of income for 15-year contracts or 7.5 percent for 30-year contracts. Investors must disclose to students how their monthly payments would compare to a loan for the same amount of money and length of time.

At issue

Unsustainable debt has the potential to undermine students’ efforts to advance their education.

Our point

Efforts on the state and national level seek to help students better manage their educational debt.