State Senate to Hear Testimony on Student Loan Debt Refinancing Bill

Higher Ed, Lower Debt Act Would Allow State Student Loan Borrowers to Refinance at Lower Interest Rate, Extend State Tax Deduction to Loan Payments and Provide More Information for Borrowers

MADISON, Wis. — The Higher Ed, Lower Debt Act (Senate Bill 194), groundbreaking legislation creating a state based authority to help student loan borrowers refinance their debt, just like you can with a mortgage, is on the agenda for a public hearing of the Senate Committee on Universities and Technical Colleges Wednesday, October 7 at the State Capitol. One Wisconsin Now Executive Director Scot Ross hailed the hearing as an opportunity for voices of the nearly one million Wisconsin borrowers with over $18 billion in student debt to be heard.

“Wisconsin’s student loan borrowers have worked hard to get their education and took on the personal responsibility to pay for it,” said Ross. “They’ve earned a fair shot at the middle class but the system is broken. This hearing is the opportunity for legislators to hear their stories and understand the critical need for common sense reform.”

The Higher Ed, Lower Debt Act, sponsored by 49 of legislators, 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, offering counseling to students and parents on the implications of student loans and requiring 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 policymakers better understand the depth and breadth of the debt crisis in Wisconsin.

The public will have the opportunity to weigh in on the bill at a public hearing of the Senate Universities and Technical Colleges Committee at 10am on Wednesday, October 7 in room 300 Southeast of the State Capitol.

A report from One Wisconsin Institute in association with national think tank Demos, Wisconsin’s Great Cost Shift, found that the state’s de-investment in higher education and rising tuition has shifted costs onto students. The consequences of reduced consumer spending on major purchase like homes and autos and billions in lost wealth for student loan borrowers threaten the state’s economic competitiveness and the future of its young people.

Earlier research from One Wisconsin Institute also found student loan debt has a significant, negative impact on major consumer purchases in Wisconsin. Borrowers were making average monthly payments of $388 on their student loans and were significantly more likely to rent versus own their home and buy a used versus new automobile.

Ross concluded, “The Higher Ed, Lower Debt Act is common sense, market based reform to help put Wisconsinites getting a higher education or job training on the path to the middle class instead of sentencing them to decades of debt. We applaud the committee for giving the public the opportunity to speak out and hope they’ll follow up with concrete actions to fix this broken system.”

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