MADISON, Wis. — Reduced public investment in higher education, stagnant financial aid for eligible students and skyrocketing tuition. That’s why Wisconsin has the fourth highest percentage of college graduates with student loan debt in the nation and how over 40 million Americans have found themselves with over $1.2 trillion in student loan debt. Wisconsin Gov. Scott Walker’s recently-unveiled higher education budget plans will only exacerbate the burgeoning student loan debt crisis, according to One Wisconsin Now Executive Director Scot Ross.
“There’s a simple equation behind the explosion of student loan debt – public funding for higher education has plummeted, financial aid for eligible students has remained stagnant and tuition has skyrocketed,” said Ross. “Gov. Walker hits the student loan debt trifecta with his budget and it’s Wisconsin students and our economy that will lose.”
Earlier this week Gov. Walker announced his 2015 budget plan includes a $300 million cut to state funding for the University of Wisconsin System, and beginning after 2016 would allow the UW System to saddle students with unlimited tuition increases. According to calculations by the nonpartisan Legislative Fiscal Bureau released by a state legislator yesterday, if the unlimited tuition hike authority were used to make up for the $300 million in state funding cuts, tuition would skyrocket by 40 percent.
In his first term Gov. Walker cut a total of $400 million from the UW and state technical colleges, reduced financial aid for eligible students and imposed a double digit tuition hike that cost students over $200 million over four years. He also refused to call for passage of broadly-supported state legislation to help student loan borrowers by allowing them to refinance their loans, just like you can with a mortgage.
Research shows the $1.2 trillion-plus in student loan debt held nationally is a significant economic drag not only on borrowers, but the entire economy. Over their lifetime, borrowers accumulate significantly less wealth due to their student loan debt, do not save as well for their retirement and delay or defer major consumer purchases like homes and automobiles. The ripple effect means significant losses for businesses that are key drivers of the economy like the auto and home industries.
Ross concluded, “Gov. Walker’s record on student loan debt is abominable, and it’s getting worse. While he may be betting he won’t be around for the fallout, you can take it to the bank that slashing support for the UW and opening the floodgates for tuition hikes will explode student loan debt and drag down our state’s economy.”