MADISON, Wis. — Missing from the reported details of the latest tax scheme to be unveiled by Gov. Scott Walker in this evening’s “State of the State” address is any help for Wisconsin borrowers caught in the $1.2 trillion student loan debt crisis. According to One Wisconsin Now Executive Director Scot Ross, the Higher Ed, Lower Debt Act could offer significant relief, over $500 per year according to the nonpartisan Legislative Fiscal Bureau, for the nearly 800,000 Wisconsinites currently paying off federal student loans.
Ross commented, “Wisconsinites trying to help themselves or their kids get ahead with a higher education or job training have been increasingly squeezed by an unfair system of skyrocketing tuition, cuts in state support for higher education and technical colleges and profiteering by big banks and even the federal government.”
He continued, “If we don’t take serious action soon we run the risk of higher education become nothing more than a multi-decade debt sentence instead of the path to the middle class.”
Under the terms of the Higher Ed, Lower Debt Act (Senate Bill 378 and Assembly Bill 496) the state 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.
Nationally, nearly 40 million Americans currently hold an estimated $1.2 trillion in student loan debt, up from $200 billion in 2000. One Wisconsin Institute’s original research demonstrated the significant, negative impact of the debt on the state economy. 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.
Ross concluded, “Borrowers have done the right thing, working hard and taking on the personal responsibility for funding their education or job training. Gov. Walker is missing a golden opportunity to help hundreds of thousands of hard-working Wisconsinites and make our state a national leader in taking on the student loan debt crisis.”