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Study: Hoosier student loan borrowers owe less but more likely in default

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(The Center Square) – Indiana student loan borrowers have an average debt that’s one of the lowest in the country. That’s from a new report showing the state won’t be affected by the resumption as others when bills become due next month.

WalletHub released a report ranking the states and the District of Columbia by the impact the end of the moratorium will have on residents. Indiana came in 20th.

The study looked at a dozen metrics to determine the rankings. Among the key findings, WalletHub found that the average student loan debt per Hoosier borrower was $33,116, which was the 40th lowest nationally. However, the state was ranked 12th in terms of student loans that are considered either past due or in default, with slightly more than 1% in that category.

The state does have more borrowers who are eligible to participate in forgiveness programs. It’s 20th nationally with 2.11% eligible, and the 3.06% of debt eligible for forgiveness is the 15th most nationally.

Donald Hossler, a professor emeritus at the Indiana University School of Education, said debt relief “is surely needed” and that the resumption payments only help borrowers by making them more aware of their situation.

“We are at an inflection point,” he said. “A serious national debate, on the scale of the Higher Education Act of 1965, is needed to find a path forward. We need an incentive structure that rewards states for investing more in public higher education and state financial aid. Furthermore, we need an incentive structure that rewards institutions for keeping tuition costs low, which also means it rewards institutions for restraining their spending. Unfortunately, given the level of dysfunction in Congress right now, this is very unlikely.”

Indiana’s four neighboring states are expected to be impacted more by the resumption of student loan payments. Kentucky is ranked ninth, according to the study, while Michigan is 11th, Ohio 13th, and Illinois is 18th.

Pennsylvania is considered the state most affected by the end of the moratorium, while Wyoming was ranked the least affected.

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