MADISON, Wis. — Student loan debt is currently burdening nearly 40 million hard working Americans with an estimated $1.2 trillion in debt. New legislation announced today by Wisconsin State Representative Cory Mason (D-Racine) and Senator Dave Hansen (D-Green Bay) could bring common sense relief for the family budgets of hundreds of thousands of state students and borrowers.
One Wisconsin Now Executive Director Scot Ross praised the bill saying, “The $1.2 trillion student loan debt crisis is a clear and present danger to our economy. The reforms in the Higher Ed, Lower Debt bill are a huge step to keep the student loan debt crisis from becoming a full-blown economic catastrophe in Wisconsin.”
The Higher Ed, Lower Debt bill 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;
- 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.
Ross noted that students, borrowers and their families are increasingly being squeezed by a system in which dramatic cuts to the university and technical colleges, skyrocketing tuition and profiteering by big banks and the federal government has resulted in nearly 40 million borrowers holding over $1.2 trillion nationally.
According to original research by One Wisconsin Institute the student loan debt crisis has been shown to be a huge drag not just on borrowers’ household budgets, but the entire state economy, reducing new car purchasing by over $200 million annually and leaving middle class households with student loan debt overwhelmingly more likely to rent than own a home.
Estimates from the nonpartisan Legislative Fiscal Bureau indicate the “average” borrower could see an income tax savings of approximately $172 under the Higher Ed, Lower Debt bill. In addition, borrowers taking advantage of the ability to refinance their student loans could see significant benefits. A borrower with an interest rate of 6.8% and the average University of Wisconsin graduate’s debt load of $27,000 who could lower their interest rate to 4% would save over $40 per month, putting nearly $500 a year back in their family’s pocket.
“Wisconsin borrowers have done the right thing, they worked hard and took on the responsibility of paying for their higher education or job training. They’re not asking for a bailout, just a system that treats them fairly and the common sense solutions in the Higher Ed, Lower Debt bill help to do just that,” concluded Ross.