MADISON, Wis. — Congressional inaction means that the interest rates on federal student loans have doubled as of today, adding a huge additional burden to the existing trillion-dollar student loan debt crisis. The consequences will be felt by millions of students across the country, each with their own story. One Wisconsin Institute, as part of their continuing student loan debt campaign, has posted an interactive map linking to the student loan debt stories of people across the United States at www.trilliondollardebt.com.
One Wisconsin Now Executive Director Scot Ross commented, “What has just happened in Washington D.C. is that every single student and family who is working hard to get ahead and using federal loans to help finance their education just fell deeper into debt, through no fault of their own.”
Congressional Democrats had proposed closing several corporate tax loopholes to keep the interest rates on federal student loans from doubling. Republicans had a competing plan that would have allowed for variable rates and was estimated to increase costs on borrowers by nearly $16 billion over the next decade.
Original research by the One Wisconsin Institute found that the one-trillion dollar plus in student loan debt held by Americans has serious economic consequences, including:
- A reported average length of debt of over 21 years, ranging from just over 18 years for associate or technical college degree, nearly 20 years for bachelor’s degree and up to 23 years for a graduate degree;
- Rates of home ownership that are 36% lower among individuals still paying on student loans versus those who have already paid off a loan across all income levels; and
- Individuals who have paid off their student loan are more likely to have purchased a new versus used vehicle in the last 10 years, with an aggregate impact of $6.4 billion in reduced new vehicle sales annually attributable to student loan debt.
The Institute’s findings are based on responses to a nationwide survey sent to a network of not-for-profit organizations. Over 61,000 individuals completed the detailed survey of their personal finances including their income and levels of educational attainment, if they had or were paying off a student loan and economic behavior like home and auto purchases. The report is available here.
Ross noted that other new information released today indicates the doubling of the federal student loan interest rates will add nearly $1,000 in debt per student, per loan.
“We’re fighting to make sure the voices and the stories of students and their families taking responsibility to fund their education are heard, and their hard work getting that higher education or job training is respected. Unfortunately as of today, the only thing these hard-working Americans are getting is deeper in debt, courtesy of Congressional gridlock instigated by Republicans,” concluded Ross.