Emily Ambrosy developed her financial savvy out of necessity. She supported herself as a University of Iowa undergraduate and today is paying her way through a UI master’s degree in urban and regional planning.

Like lots of students, Ambrosy has relied on student loans. But she says many of her peers weren’t equipped to make judicious decisions about the money they borrowed.

“I’d see friends using their loans to buy clothes or electronics,” she says. “That often led them to borrow more and build up more debt.”

The UI Office of Student Financial Aid (OSFA) wants to change that. Financial aid staff have launched a series of projects that aim to better educate students about college debt and money management.

Financial basics online

Mark Warner’s advice to students foregrounds the financial basics: assess your priorities, establish a budget, and make borrowing choices that serve your goals.

“Borrow what you need, not what you may be eligible for,” says Warner, assistant provost for enrollment management and director of student financial aid. “Student loan debt is both debt of need and debt of choice. We encourage students to minimize the latter.”

Since 2010, the UI has offered a one-semester-hour online course called Managing Your Money to teach financial basics. Nearly 4,000 students have enrolled over the past few years. The noncredit Cash Course covers similar ground.

About 60 percent of UI undergraduates graduate with some educational debt, mostly federal loans. UI grads are reliable when it comes to paying back their loans—Iowa’s default rate is only about 2 percent, compared to nearly 9 percent nationally—but UI officials want to cut the debt load.

“We’d like the class of 2016 to graduate with less debt than the national average,” Warner says. That means taking proactive and personalized measures.

Proactive communication

Ambrosy has worked through college and into graduate school, including a job with the Department of Management Sciences in the Tippie College of Business. One day, Gary Fethke, professor emeritus in the department, asked her perspective on student debt.

“He wondered what kind of information students received about loans,” she recalls. “I told him I’d received an email from the UI financial aid office that very day.”

The email in question went out to some 12,000 UI students who’d borrowed federal loans in 2011-2012, pointing them to web resources including the National Student Loan Data System that shows students exactly how much they’ve borrowed to date, repayment and salary calculators, and more. UI OSFA staff plan to update and distribute the message every spring.

“Colleges and universities have an obligation to provide information about debt programs, including the wide variety of repayment options,” says Fethke, who’s served as interim UI president and written extensively about challenges facing higher education. “They also need to teach students about potential payoffs associated with various programs and degrees on offer.”

Nationally, various factors contribute to rising student debt—higher tuition and lower state support, stagnant incomes, readily available federal loans, more low-income students in college, and the emergence of for-profit higher education programs.

“The median student loan is about $12,500, and the average loan about $25,500. This implies that some students are borrowing a lot,” Fethke says.

“Given the earning premiums associated with a college degree, a typical student can successfully meet loan requirements. Those who overextend themselves will have problems, but that’s true of any kind of loan.”

Personalized counseling

Identifying and assisting students who show potential for problems is the goal of UI OSFA’s latest initiative, which provides early intervention and one-on-one counseling.

The program is one of several using MAP-Works, a comprehensive college-transition survey required of all first-year undergraduates. Students receive customized reports that direct them to campus resources, but university offices also get lists of individual students who may need a hand in areas from academics to socialization to finances.

UI OSFA received a UI Student Success Grant for a program that trains College of Education graduate students to offer financial aid and money-management counseling. The graduate students see students who cite financial concerns via the MAP-Works survey, or who are referred by campus partners.

Reaching out to individual students will help manage debt levels and ultimately help more students complete their programs, says Sara Harrington, the UI OSFA assistant director of student loans and academic progress who developed the program.

One of the things she and her colleagues most hate to see: a student who leaves the university with accumulated debt, but without a degree.

“This is part of the university’s overall focus on retention and early intervention,” she says. “We think that when it comes to finances, providing a personal touch will really make a difference.”

Lifelong lessons

Measures like these earn high marks from observers like Fethke.

“We have a well-informed staff of professionals who care very much about what they’re doing,” he says. “I’m impressed with their commitment to students.”

These programs don’t only aim to help students finance their educations and manage student loans. They also seek to shape lasting attitudes.

“We want students to pick up lessons they’ll apply throughout their lives,” Warner says. “We hope that our programs will encourage them to give longer and more careful thought to borrowing and debt in general.”