Report ranks Ind. 11th for high student loan debt

WEST LAFAYETTE, Ind. (AP) -- Indiana ranks 11th highest in the nation for the average amount of student loan debt carried by 2011 graduates of its public, four-year universities, a new report finds.

The average debt in Indiana was $27,500, or $900 higher than the national average of $26,600 for students earning bachelor's degrees, said the report released last week by the Project on Student Debt at the nonprofit Institute for College Access & Success. It said 63 percent of the state's 2011 graduating class was in debt, compared with two-thirds nationally.

"It is pretty hard to look at those numbers and not be concerned," Indiana Higher Education Commissioner Teresa Lubbers told the Journal and Courier. "It is having a chilling impact on how people are making decisions on higher education."

Institute President Lauren Asher said even as unemployment rates for college graduates fell slightly from 9.1 percent in 2010 to 8.8 percent in 2011, anxiety continued for those figuring out how to pay for a college degree.

"In these tough times, a college degree is still your best bet for getting a job and decent pay," Asher said. "But, as debt levels rise, fear of loans can prevent students from getting the education they need to succeed. Students and parents need to know that, even at similar looking schools, debt levels can be wildly different."

The Indiana institution where students had the highest average loans was Indiana University-Northwest at $31,686, while those at the University of Southern Indiana owed the least, $18,046. Purdue University's average student debt was at $27,268 and Indiana University's was at $28,434.

Ted Malone, Purdue's director of financial aid, said the West Lafayette campus has ongoing efforts to teach students financial literacy and to help them budget better so they borrow less.

"You should not take more debt than you expect your first-year salary to be," he said. "That should keep your payments under 10 percent of your disposable income."

Recently the U.S. Department of Education published its first study of three-year default rates on student loans. It found 12.9 percent of Indiana students defaulted, below the 13.4 percent national average. It based calculations on the percentage of students whose repayments were due to begin between Oct. 1, 2008, and Sept. 30, 2009, and who defaulted before Sept. 30, 2011. Borrowers typically are in default when payments are delinquent for 270 consecutive days.

The main campuses of Purdue and Indiana universities had the lowest student loan default rates among public universities in the state. The rate at West Lafayette was 2.8 percent, and at IU-Bloomington it was 3.4 percent.

The highest rates were Vincennes University at 21.5 percent and Ivy Tech Community College at 20.2 percent.

Jeff Fanter, an Ivy Tech spokesman, attributed the high default rate to how the rates were calculated this year.

Lubbers said more details are needed to understand why some students at different schools fall into default at higher rates.

"We need to see where are they borrowing and where are they spending it. We know the cost of Ivy Tech is lower than other institutions."

Information from: Journal and Courier