The Trillion Dollar Student Loan Debt Crisis
Over the years, exponential increases in tuition and fees coupled with challenging economic times have made it nearly impossible for students to work their way through school, as was commonplace in the past. In fact, nearly 40 million Americans now hold over $1.2 trillion in student loan debt nationally.
Unfortunately, Wisconsin currently ranks 10th in the nation for number of college students with debt, with 67% of graduates from four-year schools having loans to repay. It is estimated there are over 900,000 Wisconsin residents with student loan debt.
Student debt is the only kind of household debt that continued to rise through the Great Recession, and is now the second largest consumer debt in our country - more than credit cards or auto loans. Having family paychecks constantly consumed by debt is a huge drain on our already struggling Wisconsin economy and prevents individuals from spending money locally on cars, new homes and communities businesses.
Some issues related to student loans can only be dealt with at the federal level. Unfortunately, Congress’ current partisan gridlock leaves little hope for real relief for student loan borrowers in the near future. We cannot wait for Congress to act. It is time for innovative, common sense solutions that will provide real relief for Wisconsin's student loan borrowers.
One of the solutions to the student loan debt crisis I’ve been proud to support in the State Legislature is the Higher Ed, Lower Debt bill authored by Senator Dave Hansen and Representative Cory Mason. The Higher Ed, Lower Debt bill would do the following:
• Allow Wisconsin’s student loan borrowers to deduct their student loan payments from their income tax, resulting in tax savings of up to $531 annually.
• Enable Wisconsin’s student loan borrowers to refinance their student loans at lower interest rates, putting potentially hundreds of dollars back in their pockets and into Wisconsin’s economy annually. For example, a borrower with an interest rate of 6.8% and the average University of Wisconsin graduate's loan debt of $27,000 who could lower their interest rate to 4% could save over $40 per month. That would put nearly $500 back in their family's pocket over the course of a year.
• Provide students and parents with detailed information about student loans, the best and worst private lenders, and ensure that students receive loan counseling so that Wisconsin’s student loan borrowers can make informed financial decisions about student loans.
• Ensure data is collected and tracked about student loan debt in Wisconsin to help policymakers and the public better understand the depth and breadth of the debt crisis in our state.
As you can see, this legislation offers common sense solutions for real savings on behalf of Wisconsinites managing student loan debt. Wisconsinites can’t afford to wait any longer for student loan debt relief and I hope we can find bipartisan support to move this proposal forward in the Wisconsin Legislature.
If you like, please take the survey below. Please do not hesitate to contact me at Sen.Shilling@legis.wi.gov with any questions you may have regarding the Higher Ed, Lower Debt bill.