MADISON, Wis. — With the U.S. Senate moving toward acting on legislation to repeal the increase in interest rates on federal student loans, U.S. Senator Ron Johnson has fallen strangely silent. Johnson, seemingly never afraid to give bad advice or offer an unproductive policy solution, has not made any public comments on the topic since his vote to increase student loan interest rates several weeks ago.
One Wisconsin Now Executive Director Scot Ross commented, “Sen. Johnson has never shied away from offering a comment, no matter how ill-informed, like telling women to ‘google it’ to get free birth control or promoting more for-profit colleges as a solution to skyrocketing college tuition. But apparently not even he is willing to defend his vote to double student loan interest rates.”
Student loan debt now tops one trillion dollars and is the second largest consumer debt in the United States, trailing only home mortgages. Congressional inaction has allowed interest rates on federal student loans to double from 3.4% to 6.8% sticking an estimated 159,000 students in Wisconsin alone with higher interest rates for loans they need to pay their tuition in the upcoming school year.
Original research by the One Wisconsin Institute, available here, 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.
Ross noted that even if Congress does undo the interest hike, more remains to be done. Common sense solutions like allowing student loans to be refinanced, like mortgages, allowing tax deductions for interest paid on student loans, limiting tuition increases to the rate of inflation and expanding financial aid to eligible students all need to be on the agenda.
“The student loan debt crisis is a clear and present danger to students, the middle class and our nation’s economy. If Sen. Johnson didn’t already have such a well-established record of ineptitude it would be nearly unbelievable that either he does not care or does not understand the disastrous impact of his vote to double interest rates on federal student loans,” concluded Ross.