MADISON, Wis. — The $1.2 trillion student loan debt crisis has drawn wildly divergent responses from two Wisconsin Congressional Representatives, according to One Wisconsin Now Executive Director Scot Ross. In the House Committee on the Budget today, Representative Mark Pocan (WI-2) is offering a common-sense proposal to allow student loan borrowers to refinance their federal loans to take advantage of lower interest rates. Meanwhile, failed Vice-Presidential candidate Rep. Paul Ryan’s (WI-1) latest budget scheme proposes slashing Pell Grants, the largest federal financial aid program for eligible students, by an estimated $125 billion over the next 10 years.
Ross commented, “The $1.2 trillion student loan debt weighing on the finances of 40 million Americans is a clear and present danger to our economy. Our elected representatives can either fight to restore fairness to the system or stand by and watch as this crisis becomes an economic catastrophe.”
Under the terms of the Pocan amendment, borrowers with federal student loans would be allowed to refinance to take advantage of lower interest rates, just like borrowers can with home mortgage and other consumer loans. To offset any costs associated with the reduced interest payments from borrowers to the government, Pocan also proposes closing several tax loopholes like those for corporate CEO pay, corporate jet depreciation and offshoring of jobs and assets.
In contrast, Rep. Paul Ryan would put higher education out of reach or force those students least able to afford rising tuition deeper in to debt. The Center on Budget and Policy Priorities analysis of the budget plan Rep. Ryan released earlier this week found the major federal financial aid program eligible students rely on to help fund their schooling would be decimated. Pell Grants would be cut by over $125 billion in the coming decade, maximum grant amounts would be frozen even as tuition skyrockets and eligibility for assistance would be scaled back.
“Borrowers have done the right thing, working hard for their education and taking on the personal responsibility of paying for it. They aren’t asking for a bailout,” said Ross. “They’ve earned a fair shot at the middle class instead of the multi-decade debt sentence they’re getting far too often under the system today.”
Ross noted how the current system is stacked against borrowers — students and their families are increasingly squeezed by skyrocketing tuition caused by cutbacks in support for higher education while Wall Street banks and even the federal government profiteer on the loans they have been forced to take out to pay for their education.
He concluded, “The system needs to be changed, but the question is how. Rep. Pocan is proposing a common sense solution to help hard working borrowers while Rep. Ryan would accelerate the downward spiral by forcing those least able to afford it deeper into debt.”