Congratulations Graduates! Welcome to the Trillion Dollar Student Loan Debt Crisis

Original Research by One Wisconsin Institute Finds Grads Saddled With Nearly $400 in Monthly Student Loan Payments for Next 18 to 22 Years

MADISON, Wis. — As another semester comes to a close at the University of Wisconsin and thousands of students complete their college careers, research conducted by One Wisconsin Institute has found that those graduating with student loan debt face an average monthly payments of $388 for the next 18 to 22 years as they join the trillion-dollar student loan debt crisis. In 2011, it was estimated that student loan debt in the U.S. topped one trillion dollars, exceeding credit card debt in the nation’s households.

Scot Ross, Executive Director of One Wisconsin Institute commented, “The trillion dollar student loan debt crisis literally stands between college graduates and their share of the American dream, deferring home purchases, preventing new car purchases and depressing economic recovery.”

Original research by One Wisconsin Institute demonstrates that the student loan debt crisis is an enormous drag on Wisconsin’s economy. Over $200 million in new car purchases are being diverted from Main Street Wisconsin to Wall Street banks on an annual basis and home purchasing rates are dramatically depressed among households with student loan debt.

Ryan Adserias, graduating with an advanced degree in education policy commented, “I was always told to go to college and that its worth whatever loans you have to take out because you’ll get a good job and make good money. As a first generation college student the opportunity to earn a college degree has been life changing. Unfortunately the system has changed since I was told to go achieve my dreams. Tuition and fees are much higher than they used to be. I will graduate with over $81,000 in student loan debt; I am not alone and it is not our fault. The system needs to change.”

The average tuition at U.S. universities has increased 600% since 1980, far outpacing income and wage growth, and increasingly students and their families have been unable to absorb the cost of college in their budgets, creating an increased reliance on student loans.

As more students were forced to take out loans, federal laws were changed to remove bankruptcy protections, refinancing rights, statutes of limitations, truth in lending requirements, fair debt collection practice requirements and even state usury laws while unprecedented powers of collection were granted to the lending industry. In addition, federal legislation was passed to encourage student loan debt consolidations, increasing the length of indebtedness and increasing the total amount paid to retire the loan.

Selma Aly, a United Council of UW Student board member graduating from UW-Madison said, “Student loans came into my life not as a way to pay for college, but as a way for me to stay in college. Tuition, room, and board are expensive, and when it comes down to it I don’t qualify for enough financial aid to cover some of the basic necessities in life and in succeeding in my studies. The system is taking advantage of students and if it doesn’t change soon we’ll fall further behind.”

According to UW System officials, over 70% of students are taking out loans to pay tuition and the average debt for a graduating student is roughly $27,000. In addition, the New York Times recently reported that the fastest growing demographic of persons with student loan debt are those over the age of 60, largely parents co-signing for their children’s student loans.

Ross noted that some steps have been taken to undo the damage of law changes adopted in the mid and late 1990s. Policies including making the government the originator of federal loans, capping loan payments at a fixed percentage of household income and limiting the term of loans could help mitigate the crisis moving forward.

He concluded, “The trillion dollar student loan debt has reached crisis proportions, not just for students and their parents but for our entire economy. This crisis is a direct result of giving Wall Street what it wanted, and it is far past time that we stop blaming the victims and demand real solutions from our policymakers.”

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