At a public hearing on the Higher Ed, Lower Debt Act (Senate Bill 194) the Senate Committee on Universities and Technical Colleges heard from Wisconsin borrowers about the urgent need for common sense reform to a higher education financing system gone awry.
The data is conclusive, the negative economic impacts of the distressingly rapid rise in student loan debt are significant. The question for our state legislators now is, will they act to do something about it to help Wisconsin borrowers and boost our economy?
Today in the United States student loan debt is approaching $1.3 trillion and in Wisconsin borrowers owe over $18 billion in federal student loan debt alone. The loans 43 million hard-working Americans, including nearly one million in our state, took out to fund their higher education or job training now exceed their credit card debt or their auto loan debt. And the crisis is getting exponentially worse, in the year 2000 student debt was $200 billion.
Students and their families are increasingly squeezed by a system in which state support for higher education is stagnant or falling. Meanwhile, big banks borrow money from the Federal Reserve at extremely low rates while charging students up to double-digit interest on loans. Even the federal government is in on it, standing to reap profits of nearly $50 billion from student interest.
In collaboration with the national think tank Demos, earlier this year One Wisconsin Institute issued a joint report finding the confluence of the these factors is endangering the quality of institutions of higher learning, threatening our state’s economic competitiveness and the future of its young people.
And the ripple effect is hurting not just borrowers and families with student debt, but our entire economy. Earlier original research by One Wisconsin Institute on the impacts of student loan debt found that instead of creating new businesses, spending money in the community, buying automobiles and purchasing homes, graduates are being sentenced to decades of debt.
The good news is that Wisconsin has the opportunity to seize the mantle of leadership in fighting the student loan debt crisis. The Higher Ed, Lower Debt Act offers common sense solutions like allowing refinancing of loans, expanding a current state tax deduction to include student loan payments and providing borrowers and legislators with more information upon which to make their decisions.
This groundbreaking legislation has garnered the support of 49 state legislators who know that allowing student loans to be refinanced just like you can a mortgage is not a handout to borrowers. Nor is providing a tax deduction for people who made an investment in their education and job training.
They are instead steps towards restoring fairness for people who have done the right thing – working hard to get an education and taking on the personal responsibility for paying for it.
The data is in, the need is pressing, a common sense solution to help is at hand and there are no more excuses for inaction from Gov. Walker and the legislature. Will they act to help or will they allow student loan debt to stand in the way of the fair shot at the middle class borrowers have earned with their hard work and personal responsibility?