MADISON, Wis. — As the U.S. Senate prepares to vote on a stopgap measure to repeal a doubling of interest rates on federal student loans, original research by the One Wisconsin Institute dramatically demonstrates the negative impact of the one trillion dollars plus in student loan debt currently held by 37 million Americans.
Scot Ross, Executive Director of the Institute and it’s partner organization, One Wisconsin Now, commented, “Our research shows that the trillion dollar student loan debt crisis is a clear and present danger to our economy, turning higher education into a decades long debt sentence instead of a path to the middle class.”
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 and among the major findings are:
- Rates of home ownership were 36% lower among individuals still paying on student loans versus those who have already paid off a loan across all income levels;
- Across all income levels, individuals who have paid off their student loan are more likely to have purchased a new versus used vehicle in the last 10 years;
- For those currently repaying a student loan, over 63% purchased a used vehicle instead of a new vehicle;
- An aggregate impact of $6.4 billion in reduced new vehicle sales annually.
Ross noted that even if Congress acts on interest rates, it is just a return to the status quo in which American families are increasingly being squeezed by student loan debt. Double-digit tuition increases and big banks and the federal government profiting to the tune of tens of billions of dollars on the interest on student loans have created a trillion dollar debt crisis that demands new policy solutions.
“These students and their families did the right thing, getting job training or a higher education. Congress needs to stop the increase in interest rates and do even more to make sure they’re treated fairly under the law and get their shot at the middle class,” concluded Ross.