Montana State University

MSU program to reduce student debt through education receives national attention

October 16, 2015

MSU students attend classes in Jabs Hall. MSU photo by Kelly Gorham.

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Montana State University received national attention on Bloomberg Business News Wednesday for a program that has reduced student debt through an incentivized financial educational program for students who have student loans.

Brendan Greeley, co-anchor of Bloomberg Television's "Bloomberg Surveillance" and senior correspondent at Bloomberg News, highlighted the MSU Know Your Debt program to make students more aware of their debt load and what they need to do to keep expenses under control. His 4:30 minute segment on the MSU program aired nationally on the Bloomberg Markets segment.

“What is amazing about this study is if you just give (students) a little bit of information, they are going to make that change the next semester,” Greeley said.

Greeley detailed the three-step MSU Know Your Debt program, started by the MSU Office of Financial Education, which is based in the Allen Yarnell Center for Student Success. The office sends a letter to MSU students who have higher than average debt levels. The letter notifies students of the amount of their current student loan debt, notifies them that in order to receive more loans, he or she will have to pass 67 percent of their classes. Students who take the letter to a university financial counselor receive $20. The letter also tells students that at MSU, any credit load above 12 credits are free.

Greeley also noted research by MSU economics professors -- Christiana Stoddard and Carly Urban of MSU as well as Maximilian Schmeiser, an economist with the Federal Reserve Board -- found that students receiving KYD letters reduced their debt loads in the subsequent semester by about 1/3 or ($1360), took more credits, and had higher GPAs in the subsequent semester.

"It is our belief that some of the effect may have come from the fact that the letter is targeted. Getting a letter when your roommate does not sends a strong signal, perhaps stronger than sending letters to all borrowers.  This speaks to the growing importance of using data to predict and identify at risk behaviors," said Stoddard.

In addition, the study found students in the program migrated to science, technology, engineering and math, STEM, majors

“They are starting to think about what their education is going to be worth later on in life,” Greeley said.

Stoddard said she was pleased that Bloomberg was positive about the research paper, “Does Salient Financial Information Affect Academic Performance and Borrowing Behavior among College Students?” She said she and Urban plan to present the data soon to the Montana University System Board of Regents.

Chris Kearns, MSU’s Vice President for Student Success, said his office was pleased with the positive reaction to the program by some of the country’s best financial journalists.

“All the credit for the KYD campaign and for working with the faculty members researching the outcomes goes to Carina Beck and her colleagues in the Office for Financial Education,” said Kearns, who oversees the office. “It is really an extraordinary set of findings by the faculty researching remarkable work by the staff. It is also incredible that our students are positively impacting their lives through this practical program.”

Chris Kearns, Vice President for Student Success (406) 994-2828, chris.kearns@montana.edu