I think it's more what you do with your PhD than where you get it. I know two profs, from my previous department, who went to Harvard and did nothing with their career.
T. Conrad Gilliam, the guy who cracked the human genome, went to third-rate institutions (I am not going to name them, but you can look them up) for his degrees because no "ivy" would have him. Now he's up there with Einstein, and Chair and Director of Human Genetics at UChicago . He has also headed Columbia's Genome Center. He did a post-doc at Harvard. Get the point?
p.s. I don't know about the English department, but IU-B is a good school, and, while small if you're used to a big city, Bloomington is quite nice. The campus is beautiful!