MADISON, Wis. — Under current federal law, students who work hard to get their education or job training and rely on federal financial aid to fund a portion of their higher education are finding themselves being punished for being hard-working. It’s common sense to stop to it, and according to student loan debt reform advocate Scot Ross of One Wisconsin Now, that’s exactly what Sen. Tammy Baldwin is doing with two new bills she introduced today.
“Students who are trying to get a higher education or job training are doing the right thing. They shouldn’t be punished for being hardworking and taking on the responsibility for paying for their studies,” commented Ross. “Kudos to Sen. Baldwin to for introducing legislation to help stop it.”
The Working Student Act authored by Sen. Baldwin would increase the earning limit for students who work and also rely on need-based federal financial aid like Pell Grants to pay for their tuition. Doing so will help limit the amount of loans these students would otherwise have to take out to fund their studies.
Sen. Baldwin also introduced the CTE Opportunity Act to allow students in shorter- term job training programs in high-demand areas for employers to qualify for federal student loans that could offer lower interest rates than private loans.
Ross noted that federal aid programs like Pell Grants are covering an increasingly smaller share of the cost of tuition since their inception. The upshot is that students are working and taking out loans to finance the remainder of their education. By punishing work by reducing federal financial assistance, students are being forced deeper into debt by having to take out more loans.
Original research by One Wisconsin Institute dramatically illustrates the need for help for student loan borrowers to keep the current $1.2 trillion debt crisis from becoming a full-blown economic catastrophe. They found that student loan debt has a significant and negative effect on critical drivers of the economy like new car and home sales, as borrowers are significantly more likely to buy a used versus new car and rent versus own their home.
“Sen. Baldwin has been an outstanding champion for Wisconsin students and student loan borrowers. There’s no one silver bullet to solve the $1.2 trillion student loan debt crisis. But common sense solutions like Sen. Baldwin’s Working Student Act and CTE Opportunity Act along with measures that would allow student loans to be refinanced would be great leaps forward in giving hard-working students and their families a fair shot at the middle class,” concluded Ross.