MADISON, Wis. — Saturday marks three years since the student loan debt Americans are taking on to pay for their education and job training crossed the one trillion dollar mark. But according to One Wisconsin Now Executive Director Scot Ross, Wisconsin Gov. Scott Walker, U.S. Sen. Ron Johnson and the Republican-led state legislature continue to ignore the plight of nearly one million state borrowers.
Ross commented, “On the third anniversary of debt topping one trillion dollars, student loan borrowers are getting a raw deal from U.S. Sen. Ron Johnson and Gov. Scott Walker right on down to state legislative Republicans. Instead of supporting common sense reforms like allowing borrowers to refinance their loans, their policies are making a one trillion dollar crisis exponentially worse.”
Original research from One Wisconsin Institute found that Wisconsin borrowers with undergraduate degrees are making average monthly payments of $350 and are significantly more likely to rent versus own their home and drive a used versus new vehicle.
The national think tank Demos study, At What Cost? How Student Debt Reduces Lifetime Wealth, found the $1 trillion-plus in current student loan debt will cost borrowers $4 trillion in lifetime wealth largely because they are unable to save for their retirement and acquire assets like a home while paying off their education debt.
A 2014 study from a home building industry consulting firm estimates student loan debt is costing the U.S. housing market $83 billion annually in lost home sales. According to the report, every $250 in monthly household student loan debt payments reduces that household’s home purchasing power by $44,000.
“There are common sense reforms in Washington, D.C. and Wisconsin that would help borrowers, like allowing them to refinance their loans just like you can with a mortgage. What’s lacking is the political will from politicians like Ron Johnson and Scott Walker to stand up for borrowers instead of protecting special interests,” said Ross.
Unfortunately for Wisconsin borrowers, Sen. Johnson has voted multiple times against legislation allowing student loan debt to be refinanced offered by fellow U.S. Sen. Elizabeth Warren and sponsored by fellow Wisconsinite Sen. Tammy Baldwin. At the state level, despite the sponsorship of 54 legislators in the 2013 session, Gov. Walker and Republicans failed to adopt a state-based bill that would have helped borrowers refinance their loans and allow them to deduct their student loans from their state taxes.
Meanwhile Walker’s 2015 state budget plan, under consideration by the state legislature, threatens to deepen the student loan debt crisis with massive cuts to the University of Wisconsin System that have already triggered tuition increases and cuts in class offerings, no increases in financial aid for eligible students and the elimination of the state agency responsible for overseeing the troubled for-profit college industry.
“Student loan debt is at crisis levels nationally and in Wisconsin. The debts are an albatross on our economy and are standing between borrowers and the fair shot at the middle class they earned with their hard work and personal responsibility,” said Ross. “What we need is action and reform, not more of the same like we’re seeing from the likes of Ron Johnson, Scott Walker and Republicans in the state legislature.”