Some states are now letting students know how much they’ve borrowed with reminder letters and it’s working wonders.

Pew Charitable Trusts reports.

What Happens When You Warn Students About Their Loan Debt?

What if lowering student debt was as easy as sending students a letter?

Indiana University officials say borrowing by undergraduates at the school has dropped 18 percent since 2012. That’s when the university began sending students annual letters that estimate their total loan debt and future monthly payments, as part of a push to boost their financial literacy.

Inspired by the results at IU, Indiana last year began requiring all colleges that accept state aid to send letters. Nebraska followed with a similar law this spring.

Republican Rep. Casey Cox, the author of the Indiana legislation, says he gets phone calls from officials in other states interested in the idea. And U.S. Sen. Joe Donnelly, an Indiana Democrat, has proposed requiring the federal Department of Education to keep a list of financial literacy best practices, perhaps including student loan letters.

A growing number of students need to borrow — and borrow heavily — to finance their college educations. And giving them more information about their debt may help change their borrowing habits. Research suggests that students say no to loans when they’re told how much they’re borrowing and how loans could weigh on them in the future.

But the approach carries risks, too. In some cases, borrowing less may make it harder for students to graduate. They might have to spend more time working and less time studying. Or they might opt for less expensive institutions that do less to guide them.

Although IU officials think financial literacy makes a difference, they haven’t actually proven that the letters — or any other initiative — drove borrowing down.