The annual “State of the State” address delivered by Gov. Scott Walker was given amidst news that the Wisconsin state budget, like those in many other states, is projected to run a surplus. But for too many hard-working Wisconsin family budgets there’s not the same good news — and the $1.2 trillion student loan debt crisis is the reason for hundreds of thousands of us.
Failing to mention the student loan debt crisis or proposing taking just a slice of the surplus to enact common sense student loan reforms is a huge missed opportunity by Gov. Walker.
The losers are Wisconsin families and students. Families like Sara Graves’.
Sara is a married mother of three children, a graduate of the University of Wisconsin Eau Claire and has student loan debt. She and her husband live in Dane County and make a solid middle class living. But student loan debt payments mean they are renting instead of owning their home. And setting aside money to for their children’s higher education is a simply not in their family budget.
Or consider Saul Newton’s story.
Saul started his higher education at UW-Stevens Point. He was the first in his family to attend college and relied on on financial aid and student loans to cover his costs. But as aid remained stagnant Saul’s tuition jumped $1,600. Despite working several jobs he couldn’t afford to continue his studies. He enlisted in the military and was deployed to Kandahar Province in Afghanistan, where he made monthly student loan payments while risking his life. Saul now attends UW-Waukesha County, thanks to the G.I. bill, but he’s still paying off his student loan debt.
Sara, Saul and hundreds of thousands of Wisconsin students and their families are increasingly squeezed by a system in which state support for higher education is slashed and tuition skyrockets. 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.
The good news is there’s common sense state legislation to help. The Higher Ed, Lower Debt Act (Senate Bill 378 and Assembly Bill 496) would:
- Create a state authority to help borrowers refinance their student loans, just like you can a home mortgage;
- Allow borrowers to deduct their student loan payments on their state income taxes, just like you can with home mortgage interest;
- Require borrowers be given detailed information before entering into loan agreements, offer counseling to students and parents on the implications of student loans and require the state to collect and disseminate information about private lenders and maintain a ranking system; and
- Track information about student loan debt in the state to help policy makers better understand the depth and breadth of the debt crisis in Wisconsin.
If we don’t act we risk higher education at a university or job training at a technical college become nothing more than a multi-decade debt sentence instead of the path to the middle class. Student loan debt is a clear and present danger to our economy and doing nothing means a $1.2 trillion crisis could balloon into a $2 trillion catastrophe.
Consider the significant, negative impact of the debt on the state economy revealed by One Wisconsin Institute’s original research. Borrowers with an undergraduate degree are making an average payment of $350 per month for 18.7 years. That debt translates into over $200 million in new car sales lost every year and borrowers making solid middle class incomes are two-thirds more likely to rent than own their own home.
Imagine the difference it would make every month if families like Sara’s could refinance their student loan debt to take advantage of low interest rates, just like you can with a mortgage, or if student loan debt payments could be deducted on state taxes.
Luckily we can restore fairness to a system gone horribly awry. It simply requires taking advantage of the opportunity before us.