As a new school year school year begins, university and technical college campuses across the state are filled with optimism and students pursuing a higher education with the promise of a brighter economic future. Yet for too many Wisconsinites who worked hard to get their education and took on the personal responsibility of paying for it, the $1.3 trillion student loan debt crisis continues unabated, burdening their family finances and holding back our economy.
The good news is it doesn’t have to be this way.
The student loan debt crisis is receiving increasingly serious attention from national candidates. Every one of the major Democratic candidates for president has endorsed allowing borrowers to refinance their student loans, just like you can a mortgage. Even top tier Republican presidential candidate Jeb Bush has acknowledged the crisis of student loan debt and college affordability.
While Wisconsin Governor Scott Walker currently seems more interested in trying to out bluster Donald Trump than helping Wisconsin student loan borrowers, our state is not without leaders who get it.
U.S. Senator Tammy Baldwin has authored legislation to help borrowers refinance their loans and stop punishing current students who must work in addition to receiving financial aid to pay for their education. Reps. Mark Pocan, Ron Kind and Gwen Moore have supported numerous other proposals to help reduce student debt. Russ Feingold has endorsed student loan refinancing as one of his economic opportunity priorities.
The state legislature can also take concrete steps to make Wisconsin a beacon of hope in the fight to stem the rise of student loan debt, make college more affordable and keep the promise that a higher education can provide a path to economic security for graduates.
The Higher Ed, Lower Debt Act (Senate Bill 194/Assembly Bill 272), cosponsored by 50 legislators from across the state, would create a state refinancing authority to help state student loan borrowers take advantage of lower interest rates. It would also extend a tax credit to payments made on student loan, deliver nearly $80 million in savings every year.
The need for reform is clear.
Original research by One Wisconsin Institute found the student loan debt crisis has a significant, negative effect on borrowers and the Wisconsin economy. Borrowers reported average student loan debt payments of $388 per month for 18 to 22 years. They are significantly more likely to rent versus own their home and at least $200 million in new car sales are lost every year because of the burden of student loan debt.
Another report–released earlier this year by One Wisconsin Institute in association with the national think tank Demos–shows how the regressive higher education policies in Wisconsin pursued by Gov. Scott Walker and Republican state legislative majorities have shifted costs onto consumers, increased student loan debt and decreased the affordability of higher education. The fallout endangers the quality of Wisconsin’s institutions of higher learning, threatening the state’s economic competitiveness and the future of its young people.
The crisis is real, the need for reform is urgent and the opportunity is before us. As the legislature reconvenes this fall our state leaders ought to adopt the common sense reforms of the Higher Ed, Lower Debt Act so that back to school doesn’t mean decades of debt for students and a lost opportunity for our state to prosper.