One Wisconsin Now Blog

by Jenni Dye

This week marks the two-year anniversary of student loan debt topping $1 trillion nationally - and another year of missed opportunities to address this growing crisis.

That one trillion dollars represents the second-largest personal debt in the United States. But even that jaw-dropping reality doesn't tell the stories of millions of borrowers who are hamstrung by federal student loan policies and the lack of meaningful action to address this crisis.

My own story is one of the countless stories that fit into the $1 trillion of student debt. I attended the University of Wisconsin for undergrad and, thanks to scholarships, graduated with little debt. What debt I did have, I was able to consolidate it at roughly 4 percent. But when I attended UW for law school, my total debt quickly topped $100,000, with interest rates locked in at 6.8 and 8.8 percent due to changes in federal law. Consolidation couldn't reduce the interest rate, as federal law required my loan remain at the average of my existing interest rates.

I interviewed at several mid-sized law firms in Wisconsin. I ended up working in my hometown, and my salary, after my student loan payment and basic living expenses, left me with a handful of dollars left each month. Later that year, income based repayment (IBR) became available due to changes in federal law - and that helped my monthly budget by reducing my payment.

But, because IBR payments may not cover accruing interest, after paying roughly $20,000 towards my loans in the past five years, I now owe more than I did when I graduated. Under IBR, any amounts owed after 25 years of repayment may be forgiven - but under current law that forgiveness will be taxable, leaving borrowers to make a large balloon payment to the IRS. Meanwhile, the federal government is projected to earn $127 billion off of student loans in the next ten years.

Multiply my story by the hundreds of thousands of borrowers in Wisconsin alone - and by our families, many of whom have helped us along the way. And multiply it by our kids, who will enter college while we are still trying to pay off our own debt. Then you start to have a picture of the impact of $1 trillion of student debt.

Research by One Wisconsin Institute shows that borrowers are more likely to buy a used car instead of a new car and rent instead of owning a home, both of which are true for me. This has an impact on our entire economy as money that could be spent at local businesses is instead spent on student debt.

The lack of a solution to the student debt crisis is not for lack of trying. Wisconsin elected officials are attempting to lead the way out of this crisis. State Rep. Cory Mason and Senator Dave Hansen authored the Higher Ed, Lower Debt bill, an innovative approach that would provide tax breaks to borrowers in repayment and allow refinancing of student loans. Unfortunately, Republicans in both houses refused to bring the bill to the floor. Mary Burke has included provisions of the Higher Ed, Lower Debt bill in her jobs plan. Gov. Scott Walker, however, has been silent on addressing our state's growing student debt crisis.

In Washington, Rep. Mark Pocan has championed a bill that would allow refinancing of federal loans, allowing borrowers to obtain the lowest interest rate available, instead of a federally mandated one. Pocan estimates that nearly 40 million borrowers could benefit from this bill. Unfortunately, this bill remains stalled in the Republican-controlled House.

Student loan debt isn't a partisan issue despite the seemingly partisan divide on who is willing to address it. It is an issue that affects Republicans, Democrats, independents, my generation, older generations who have returned to school to seek additional training in a tough economy, and future generations who will continue to have the same problems we do - until we take action.

It is past time for all of our leaders to lead on addressing student loan debt. They have over one trillion reasons to do so.

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Jenni Dye is the Research Director of One Wisconsin Now & Institute, and like the nearly 1 million student loan borrowers in Wisconsin, isn't asking for a bail out, just a fair shot at the American Dream.

by Scot Ross

Is there new hope for the 753,000 Wisconsinites with federal student loan debt and the tens of thousands more with debt from private loans for their schooling?

In recent years borrowers have been squeezed by a system in which cutbacks in state aid have led to skyrocketing tuition while big banks, and even the federal government, have been profiteering on the interest on student loans. The result is over $1.2 trillion in student loan debt that is dragging down our economy and standing between 40 million Americans and a fair shot at the middle class.

Borrowers have done the right thing - they've worked hard to get an education or job training, and they've taken on the personal responsibility of paying for it. They're not asking for a bailout. But they deserve a system that treats them fairly and doesn't turn their education from a path to the middle class into a multi-decade debt sentence.

In Wisconsin the response to the crisis from Gov. Walker has been silence and indifference interspersed between the largest cuts to public education in state history and hiking UW System tuition to the tune of $200 million plus for students attending over his four-year term.

Meanwhile the Republican controlled legislature gave borrowers the opportunity to offer their support during public hearings on the Higher Ed, Lower Debt Act (Senate Bill 376 and Assembly Bill 498). But when it came time to count the votes, Republicans voted along party lines to keep the full legislature from having the opportunity to debate and vote on the bill.

The good news is there appears to be new hope on the horizon. Gubernatorial candidate Mary Burke has included some of the common sense solutions from the Higher Ed, Lower Debt Act in her newly released "Invest for Success" jobs plan.

Specifically Burke calls for creating a mechanism to allow Wisconsin borrowers to refinance their student loans to take advantage of lower interest rates, just like you can with a home mortgage or other consumer loan. And Burke would allow borrowers to deduct student loan debt payments on their state taxes, just like you can with home mortgage loan interest.

One might ask: why would student loan debt relief be included in a jobs plan? Because, it seems, Mary Burke gets it.

Original research by One Wisconsin Institute found that borrowers with an undergraduate degree in Wisconsin were making average payments of nearly $350 per month for almost 19 years. The impact of this debt is dramatic and negative for the entire state economy. For example, over $200 million new car sales are lost annually and rates of home ownership are significantly lower among student loan borrowers versus their economic peers without debt.

Just think of the economic windfall we could reap by reversing this trend.

Making higher education and job training more affordable will help state businesses get the well-trained workforce they want.

Offering relief to borrowers will boost consumer spending here in Wisconsin instead of sending interest to Wall Street banks.

And freeing a generation of well-trained, well-educated Wisconsinites from the chains of crushing debt will spur the entrepreneurism and small business creation needed to break out of our economic doldrums.

Common sense reform can restore fairness to a student loan system gone awry and give our economy a needed boost. All that's needed is the political will to invest in the people of Wisconsin and let them succeed.

Luckily it seems that some people are starting to get it.

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Scot Ross is Executive Director of One Wisconsin Now and One Wisconsin Institute, organizations leading the effort for student loan debt reform in Wisconsin and members of the national Higher Ed, Not Debt coalition.

from Higher Ed Not Debt:

Higher Ed Not Debt is a a multi-year year campaign of dozens of organizations dedicated to tackling the crippling and ever-growing issue of student loan debt in America. With over $1.2 Trillion in outstanding educational debt, affecting more than 40 million Americans, we have partnered around a simple message and a clear objective: Higher Ed, Not Debt!

Now, more than ever, a college degree is the ticket required for entry into the middle class. Unfortunately, the skyrocketing cost of this ticket is risking our nation's future as a middle‐class nation. The long‐term vision of this campaign is to ensure that quality higher education is affordable and accessible to all, without the burden of financial hardship.

The work we do is based on four core principles:

 

  • Providing support to borrowers currently paying off the existing $1.2 trillion of debt;
  • Addressing the causes of declining affordability and quality, including changes to state funding and financial aid policies;
  • Educating the public about Wall Street's complicity in the creation of the $1.2 Trillion student debt crisis; and
  • Civic engagement across all geographic, demographic and political lines.

This new campaign is a joint effort by a variety of organizations including labor groups, non-profits, progressive think tanks and grassroots organizations, and you. Together, we can make this happen.

The time is now.

by Lauren Krupp

On October 16, State Representative Mason and State Senator Hansen presented the Higher Ed, Lower Debt Bill. This is a significant piece of legislation that is first of its kind and I would like to thank them for taking on the issue of crippling student loan debt.

This bill would help student loan borrowers and unchain them from their debt. Borrowers would be allowed to refinance and deduct payments on state income taxes, two practices already in place for home mortgages, the only personal debt that is larger than student loan debt. Refinancing the interest on borrower's debt helps the debt become manageable. In addition, the bill requires that borrowers receive detailed information before entering any loan agreements. Students gain protection from signing away the next twenty, thirty, or even forty years of their life in order to pay for college now.

Alleviating student loan debt is a necessity. According to research done by the One Wisconsin Institute, the average national total monthly student loan payment is $388. That money is not being put towards buying a car, becoming a homeowner, or even starting a family. The staples of what it means to be middle class in America are being stripped away by student loan debt.

The Higher Ed, Lower Debt Bill advocates for students. Too often in the pursuit of higher education, students are unaware of their options and do not know what signing a loan will entail down the road. Blindly agreeing to a loan is not a fair practice. If students are being forced to pay higher tuition and fees every year, then they should be informed about the details of a loan. The more information students receive upfront about different lenders allows them to make more educated decisions. Loans should be a catalyst to opportunity, not a promise to lifelong debt.

Student loan debt is a national issue. Over the summer, we saw Congress fight about interest rates and student loans. They did not pursue and substantial reforms. In fact, Republicans blocked a Senate bill that would have frozen the interest rate at 3.4% for another year from even being voted on. House Republicans did vote for their destructive plan that would have added an estimated $15.6 billion to the total amount of student loan debt in the next decade. In the end, Congress's compromise made interest rates variable, but with a cap. The ability to refinance would eliminate the uncertainty of student loan interest rates. Wisconsin is leading the nation by taking this issue, and I hope other states follow. 

When I graduate from UW next May, I will be leaving without any debt. I benefit from entering the professional world not burdened by loan payments. If I decide to go to graduate school, which feels like a requirement for the current job market, I know I will need to take out loans. There is nothing wrong or shameful about needing a loan to help finance an education. With the proposed bill, I take comfort in knowing that I will receive all the information I need before signing a loan. Additionally, the system would be set up to help me pay the loan back quickly and fairly. If the Higher Ed, Lower Debt bill passes, the prospect of going to graduate school becomes a lot less scary and a far more achievable goal.

I am fortunate to attend the University of Wisconsin-Madison. I want all of my peers to be invested in and excited about receiving a phenomenal education. The Higher Ed, Lower Debt Bill creates a system that allows students to focus on school now, make educated decisions about how they are paying for school, and helps them afford their payments later.  

by Saul Newton, One Wisconsin Now Guest Contributor

My name is Saul Newton. I'm a student at University of Wisconsin-Waukesha, pursuing a degree in communications. I'm a US Army veteran, deployed to Kandahar Province, Afghanistan from 2010-2011. And I'm a student loan debtor.

As Veterans Day approaches, we take a moment to honor those who have served in our nation's armed forces. For me it's a time to reflect on those who wore the uniform before I did, including my father and grandfather, and my brothers and sisters who still wear the uniform and sacrifice so much. It's also a time for me to reflect on my story and what brought me to serve my country.

When I started my college career seven years ago I dreamed of earning an education. I dreamed of earning a bachelor's degree, staying in Wisconsin to work and raise a family, and securing a middle class job. My parents couldn't go to college, but they instilled the value of education in me from a young age. Because of their encouragement I dedicated myself to earning a college education.

In 2007, I enrolled at University of Wisconsin - Stevens Point. My working class family could not afford tuition, even at a state university. I had to rely on financial aid and student loans to pay for my education. Year after year I watched as the cost of college rose. From 2007 to 2009 my yearly tuition rose $1,600. I worked several jobs to make ends meet, but I was drowning.

My only option to afford a college education was to enlist in the military, to serve my country and receive the benefits of the GI Bill. Two years into my college career, with thousands of dollars in student loans already racked up, I joined the US Army. Less than a year later I was deployed to Kandahar Province in Afghanistan.

While I was deployed, going on daily patrols and fighting for my country, I was making payments on my student loans, loans that I have still not paid off.

Today I can pursue a bachelor's degree because of the GI Bill. I am thankful for the opportunity and my experience, but students should not have to go to war in order to afford a college education. And like 753,000 other Wisconsinites, I will graduate with student loan debt that will burden me for years.

The Higher Ed, Lower Debt bill is a lifeline for students like me all over Wisconsin. Under this legislation I could refinance my loans to qualify for lower interest rates on my loans. I could deduct my student loan payments from my state taxes. Students would have more information to make borrowing decisions. This bill protects students, so we can be productive workers and entrepreneurs.

The simple fact of the matter is that a college education is the path to economic security. Students like me are working hard to provide for our future and improve our communities. We aren't asking for a handout, but we are asking for a fair shot. That is what the Higher Ed, Lower Debt bill provides.

By Scot Ross

Via Milwaukee Journal Sentinel

Now that the U.S. Senate has acted on a deal to temporarily lower the interest rates on some new federal student loans, and an agreement with the House of Representatives seems imminent, some among the political and pundit class seem ready to declare the student loan debt crisis solved.

Nothing could be further from the truth.

Under the plan adopted by the Senate, interest rates for borrowers using federal Stafford loans in the fall would be set at 3.86% for undergraduates, 5.41% for graduate students and 6.41% for parents. For now, these rates are below the 6.8% that they had risen to on July 1. However, the interest rates will be allowed to rise, in some cases as high as 10.5%, based on the economy.

For future borrowers, the deal falls short because instead of closing corporate tax loopholes today, interest rates are allowed to rise. In fact, they are projected to exceed the 6.8% they are at today within five years, costing borrowers billions more in interest.

And there is nothing to addresses the $1.2 trillion student loan debt crisis that currently burdens our economy and the finances of over 37 million hardworking Americans.

Student loan borrowers have done the right thing. They've worked hard and taken on the responsibility of paying for the education or job training they need to get ahead.

They are not asking for a bailout. But they deserve a system that treats them fairly and doesn't turn their hard work and education into a multi-decade debt sentence instead of the path to the middle class.

Right now, American families are increasingly being squeezed by skyrocketing tuition and a system in which big banks and the federal government make billions in profits from the interest on their student loans.

State and federal government have made deep cuts in higher education funding, resulting in tuition and the average amount of student loan debt doubling over the past 12 years.

Banks that can borrow money from the Federal Reserve for less than 1% are charging student loan borrowers 12% and more for loans. And the federal government is projected to earn over $50 billion from the interest on student loans next year alone.

Yet, almost unbelievably, student loan borrowers are prevented by law from refinancing their debt.

The result is that student loan debt is now the second biggest consumer debt in the country, more than credit cards and auto loans. Only mortgage debt is higher.

In her speech during the Senate debate on the student loan interest rate legislation, Sen. Tammy Baldwin (D-Wis.) was right on when she said higher education and job training ought to be a path to the middle class, not a path to indebtedness.

To ensure that the promise of a more secure economic future offered by higher education and job training is preserved, we need action on common-sense solutions today. We ought to allow people to refinance their student loans, like they can a mortgage, deduct the interest on their student loans from their taxes and limit tuition increases to the rate of inflation.

Our leaders in Washington, D.C., and in Wisconsin must recognize the clear and present danger of student loan debt to our economy and the hopes and dreams of millions of hardworking Americans. Without a sense of urgency and action on real, comprehensive solutions, we run the risk of seeing the $1.2 trillion student loan debt crisis become a $2 trillion economic catastrophe.

Scot Ross is executive director of One Wisconsin Now and One Wisconsin Institute. Research conducted by the One Wisconsin Institute found that in Wisconsin and nationally borrowers are paying off their student loans for nearly 20 years and that debt has a significant, negative impact on the state and national economy.

Once again Congress failed to act. On July 1 the interest rates for Stafford loans jumped to 6.8%, which is double the current rate. It is not like Congress did not know this was coming. The July 1 deadline has been set for a year. Since January 2013, we only saw democrats stepping up to present solutions to this problem. Congressional Republicans refused to engage in this issue and decide instead to stop any legislation from passing. They chose to leave students with an unprecedented interest rate hike.

Senate Democrats were looking for an extension by passing a bill that would freeze the interest rate at 3.4% for another year while they continued to debate a long-term solution. However, Senate Republicans blocked that bill from advancing today. Of the 51 senators who voted in favor of taking a vote on the bill, there was not a single republican. Sixty votes were needed to move the bill forward. Senator Reid promised that negotiations over student loan interest rates will continue. It is discouraging though that our leaders wait until after the problem has occurred to begin devising a solution.

Congress's inaction on student loan interest rates was also largely due to the House and Republicans. House Republicans voted along party lines to deny a freeze in interest rates for another year and voted for their plan that would have added an estimated $15.6 billion to the total amount of student loan debt in the next decade.

Before today there was simply no action in the senate. They took NO VOTES on any bills related to student loan interest rates. The conversation around interest rates by US Senators has really only happened in the last month or so and was primarily held by democrats. US Senator Baldwin has been vocal about supporting bills from fellow democratic senators designed to keep interest rates from doubling. Her republican colleague, Senator Johnson, in addition to voting no today, did not address this issue. His answer to the student loan debt crisis is more private colleges. Student and their families who hold this debt are looking for leadership and relief on interest rates for students, not doubled rates or more private colleges.

Helping the 37 million people with student loan debt and controlling skyrocketing tuition needs to be a priority in congress. Democratic Senators have proposed bills to help students and their families battle this debt. In May, Senator Gillibrand from New York introduced the Federal Student Loan Refinancing Act, which would lower interest rates for many borrowers repaying their federal student loans. Senator Durbin from Illinois has been advocating for the Fairness for Struggling Students Act since January. That bill would make private education loans dischargeable through bankruptcy like they used to be in 2005 before Congress and the banks changed the bankruptcy code. And Senator Brown from Ohio wants to pass legislation that would give those with expensive student debt the ability to refinance into cheaper loans at no cost to taxpayers. In contrast, Senate Republicans have not put forward any proposals that would help Americans burdened by what has become lifelong debt.

It wasn't just Congressional Republicans that refused to address student loan interest rates, the media was also absent from the conversation. Stories about what the 6.8% rate meant, who was impacted by this change, and disgust at Congress's inaction were posted a few days before and after rates doubled. The mainstream media attention doesn't do much good when the deadline has already passed. These stories needed to be on the front page weeks ago to give people time to contact their representatives and demand a solution. Unlike other news outlets, One Wisconsin Now has been talking about student loan debt since 2011 and will continue to push this issue until real solutions happen. Congress can only respond to their constituents when the constituents are adequately informed of the problem.

Many changes are needed to help alleviate the problem, and these changes will only happen if this issue becomes prominent enough to spur change.

Lauren Krupp is an intern at One Wisconsin Now. She will be a Junior in the fall at UW-Madison majoring in Political Science and Communication Arts.

By Cara Josephson

To many, the idea of the "American Dream" is simple: Work hard, follow the rules, and you can receive an education, degree, high paying job, or whatever your dream may be. Unfortunately, with the crippling student loan debt crisis, many now realize all of their time and effort spent to achieve a higher education is not paying off as it should.

The destruction of the American Dream comes in the ugly form of student loan debt.

Since the privatization of student loans and subsequent stripping of consumer protections heavily-supported by Wall Street and the big banks, college tuition has skyrocketed. It is unaffordable for most without taking out student loans. Many who wish to obtain an education fear remaining in debt for years after they graduate due to being saddled with numerous student loans.

The cost of an average student loan after college is already at $27,000. Dreams of graduate school are becoming less and less realistic for those already suffering from debt from their undergraduate education. And now because of obstruction by Senate and House Republicans, the Stafford loans rate has jumped from 3.4% to 6.8%, making college even more unreachable.

The countless student loan debt stories are already haunting, and doubling the current rate only makes future stories more terrifying. One Wisconsin Institute's website http://trilliondollardebt.com/ highlights the struggles and stories of real people across the country due to student loan debt.

Anitra from Wisconsin graduated from college in 2007, and nearly 35% of her monthly income goes to her student loans. She works three jobs and even volunteered as a "guinea pig" in a drug-testing lab for some extra money. Anitra has even considered selling her musical instruments, which are her love and passion simply to pay the bills. She regrets her decision to go to college every day and believes " higher education has become a sick, money-making scheme".

Yolanda from North Carolina went back to school in 2010 for a graduate degree after being out of school for 13 years. After completing her degree, she has suffered with trying to find employment. Even though she returned to school for a graduate degree, she is still unable to find a decent stable job. She says she is now burdened with student loan debt in addition to "having no health insurance and struggling to make it from pay day to pay day". Many have been led to believe that returning to school for a higher degree is the answer to our problems, yet the reality of the situation is that this is untrue.

Elizabeth from Pennsylvania graduated from college and the only job she has been able to get is part time at a grocery store. She has no social life and does not want to get married so her husband is not forced to struggle financially along with her.

Michael from Texas also fears not being able to move on with his life due to his student loan debt. He recently graduated from the University of Houston and enrolled in graduate school while working in a school district. He still lives at home with his parents, and does not know when he will be able to afford a house, a new car, or even start a family but has "put it off because of his tremendous debt". He fears paying the loans back because of their increasing enormity.

And it goes on and on. Hundreds and hundreds of stories.

With so much already being sacrificed to go to school and get technical college training, at what point will it stop? Dreams of having health insurance, retiring at a decent age, having a stable job, buying a home, and even starting a family have been destroyed all to pay back student loans. At what cost should people who just graduated pay back for their schooling?

How many more people must sell their possessions and passions and bequeath themselves as guinea pigs and lab rats simply to get money to pay their student loans?

Something needs to be done and quickly if we do not want to see even more pain from student loan debt.

Doubling the interest rate will not solve any of these problems, it will merely double them.

Cara Josephson is an intern at One Wisconsin Now. She will be a senior in the fall at UW-Madison majoring in Communication Arts.

By Cara Josephson

To many, the idea of the "American Dream" is simple: Work hard, follow the rules, and you can receive an education, degree, high paying job, or whatever your dream may be. Unfortunately, with the crippling student loan debt crisis, many now realize all of their time and effort spent to achieve a higher education is not paying off as it should.

The destruction of the American Dream comes in the ugly form of student loan debt.

Since the privatization of student loans and subsequent stripping of consumer protections heavily-supported by Wall Street and the big banks, college tuition has skyrocketed. It is unaffordable for most without taking out student loans. Many who wish to obtain an education fear remaining in debt for years after they graduate due to being saddled with numerous student loans.

The cost of an average student loan after college is already at $27,000. Dreams of graduate school are becoming less and less realistic for those already suffering from debt from their undergraduate education. And now because of obstruction by Senate and House Republicans, the Stafford loans rate has jumped from 3.4% to 6.8%, making college even more unreachable.

The countless student loan debt stories are already haunting, and doubling the current rate only makes future stories more terrifying. One Wisconsin Institute's website http://trilliondollardebt.com/ highlights the struggles and stories of real people across the country due to student loan debt.

Anitra from Wisconsin graduated from college in 2007, and nearly 35% of her monthly income goes to her student loans. She works three jobs and even volunteered as a "guinea pig" in a drug-testing lab for some extra money. Anitra has even considered selling her musical instruments, which are her love and passion simply to pay the bills. She regrets her decision to go to college every day and believes " higher education has become a sick, money-making scheme".

Yolanda from North Carolina went back to school in 2010 for a graduate degree after being out of school for 13 years. After completing her degree, she has suffered with trying to find employment. Even though she returned to school for a graduate degree, she is still unable to find a decent stable job. She says she is now burdened with student loan debt in addition to "having no health insurance and struggling to make it from pay day to pay day". Many have been led to believe that returning to school for a higher degree is the answer to our problems, yet the reality of the situation is that this is untrue.

Elizabeth from Pennsylvania graduated from college and the only job she has been able to get is part time at a grocery store. She has no social life and does not want to get married so her husband is not forced to struggle financially along with her.

Michael from Texas also fears not being able to move on with his life due to his student loan debt. He recently graduated from the University of Houston and enrolled in graduate school while working in a school district. He still lives at home with his parents, and does not know when he will be able to afford a house, a new car, or even start a family but has "put it off because of his tremendous debt". He fears paying the loans back because of their increasing enormity.

And it goes on and on. Hundreds and hundreds of stories.

With so much already being sacrificed to go to school and get technical college training, at what point will it stop? Dreams of having health insurance, retiring at a decent age, having a stable job, buying a home, and even starting a family have been destroyed all to pay back student loans. At what cost should people who just graduated pay back for their schooling?

How many more people must sell their possessions and passions and bequeath themselves as guinea pigs and lab rats simply to get money to pay their student loans?

Something needs to be done and quickly if we do not want to see even more pain from student loan debt.

Doubling the interest rate will not solve any of these problems, it will merely double them.

Cara Josephson is an intern at One Wisconsin Now. She will be a senior in the fall at UW-Madison majoring in Communication Arts.