MADISON, Wis. — One Wisconsin Now Executive Director Scot Ross said a new report by the Wisconsin Taxpayers Alliance (WISTAX) points to the need for state legislation to help borrowers better manage student loan debt and help make their education or job training “pay.” The benefit, according to Ross and research from One Wisconsin Institute, would be a boost in consumer spending on key economic drivers like new vehicle and home purchases.
“The WISTAX study reveals how students and their families are increasingly being squeezed because of a system in which state support for higher education is being slashed and tuition is skyrocketing. And our earlier research at One Wisconsin Institute shows the fallout is rising student debt, $1.2 trillion nationally, and stifled economic activity,” commented Ross.
WISTAX found that from 2002 to 2013 the costs of education paid by University of Wisconsin students rose dramatically as state support for higher education dropped precipitously and tuition increased. This in turn forces students to take on higher levels of debt to fund their education.
Earlier research from One Wisconsin Institute showed the dramatic and negative impact of that debt on Wisconsin’s economy, directly resulting in over $200 million in lost new vehicle sales on an annual basis and leaving student loan borrowers with solid middle class incomes two-thirds more likely to rent versus own their home.
Legislation recently introduced by State Representative Cory Mason and Senator Dave Hansen, the Higher Ed, Lower Debt Act (Assembly Bill 496 and Senate Bill 378), 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.
He concluded, “We ought to do right by these students who are doing the right thing for themselves and their families, working hard and taking on the responsibility of paying for their education and job training to get a shot at the middle class. We need to restore fairness to the system with legislation like the Higher Ed, Lower Debt Act.”