Rep. Messer Authors Bill Modeled After IU Program to Reduce Student Loan Debt

WASHINGTON (Thursday, March 9, 2017) — Rep. Luke Messer (IN-06) today introduced legislation modeled after an Indiana University program to help reduce student loan debt.

Messer’s bill, the Letter of Estimated Annual Debt for Students (LEADS) Act, would require higher education institutions that accept federal aid to send an annual letter to every student estimating their total loan debt and future monthly payments.

“Student loan debt has tripled over the last two decades, handcuffing our young people as they try to make it in today’s economy,” Messer said. “Often, students don’t realize the true burden of their debt. We want to empower students with information so they can make better-informed decisions about their education, finances and future.”

According to a 2014 Brookings Institute study, about half of all first-year undergraduate students in the U.S. seriously underestimate how much student debt they have. Worse yet, 14 percent of students who have student loans think that they do not have any student debt at all.

The LEADS Act, H.R. 1429, is modeled after a program started at IU to better educate students about their loans and prevent over-borrowing.

In 2012, IU began sending annual letters to every student estimating their total loan debt and future monthly payments. Four years later, officials at the University reported undergraduate borrowing had dropped 23 percent.

Inspired by the results of the program, the Indiana General Assembly enacted bipartisan legislation in 2015 that required all colleges that accept state aid to send similar letters.

“Through an extensive financial literacy program, a focus in financial aid on student loan debt and more incentives to get students to graduate on-time, Indiana University has reduced student loan debt by over $100 million over the past four years,” said Jim Kennedy Associate Vice President for University Student Services and Systems at IU. “The annual student loan debt letter implemented by IU has played a major role in overall student awareness about student loans and responsible borrowing, and we are proud that it is serving as a model for other institutions committed to ensuring the affordability and accessibility of quality higher education.”

The LEADS Act is among the policy recommendations supported by the Republican Policy Committee’s Millennial Task Force, a group dedicated to empowering millennials through sensible policies, limited government, and free market opportunities.  Learn more about the Millennial Task Force’s policy recommendations and view the Task Force’s Millennial Report here.

Messer is chair of the Republican Policy Committee and co-chair of the Millennial Task Force.