June 4, 2016
Student Loan Debt
Currently, the U.S. Federal Reserve System estimates that there are 753,000 Wisconsin residents with student loan debt. Student loan debt is the largest consumer debt in our country with the average loan borrower $22,400 in debt and paying around $388 per month for almost nineteen years to finally dissolve that debt. Undoubtedly, student loan debt issues a huge burden on Wisconsin households. Currently, the collective student loan debt in the United States is 1.2 trillion dollars; the Wisconsin families’ share of this debt has been shown to drag on our entire state economy.
To add insult to injury, banks profit from tens of billions per year from interest while Wisconsin students are overwhelmed by the mass of their debts. The federal partisan gridlock is stalling national efforts to aid student debt holders; we cannot wait for Congress to act. In October, Senator Dave Hansen and Representative Cory Mason introduced the “Higher Ed, Lower Debt" bill. The Higher Ed, Lower Debt Bill provides practical solutions for Wisconsin’s student loan crisis. Through this piece of legislation, student loan borrows will be able to deduct their payments from their income tax, refinance their loans at lower interest rates, and receive counseling regarding their loans.
Through the Higher Ed, Lower Debt bill, typical borrowers can expect an average annual saving of $179 or as much as $531; this money is saved through allowing borrowers to deduct their student loan payments from their state taxes. By expanding Wisconsin’s higher education tuition expenses income tax deduction, this allows student loan payments (not just interest) to be deducted from income taxes. Furthermore, borrowers can expect hundreds of dollars to be put back in their pockets as the bill permits loan refinancing based off of changing interest rates. The creation of the Wisconsin Student Loan Refinancing Authority will develop and implement a program to refinance student loans for state residents. Importantly, under the bill, tax dollars will not be used for refinancing. Money that is saved is money that is spent in our community; the Higher Ed, Lower Debt bill revives the economy and the pockets of Wisconsin citizens.
The unavoidable fact is that nineteen years is a long time to make payments for debt incurred earlier in one’s life and career. The Higher Ed, Lower Debt bill seeks to educate borrows before assuming masses of debt, specifically by requiring all institutions of higher education to provide loan counseling for students. This increased transparency ensures that both parents and students will have clear loan information. It is crucial that students make informed financial decisions about their loans so that they can better understand the financial implications of their education.
Instrumentally, the bill will also ensure that data regarding student loan debt is collected and tracked in order to allow policymakers to better understand the depth of the debt crisis in our state. The bill would standardize data collected from all Wisconsin institutions of higher education, and require the Wisconsin Higher Educational Aids Board (HEAB) to submit an annual report to the legislature regarding student loan debt in Wisconsin. Understanding state debt provides the government with essential information to create and modify legislation to better address the concerns of the public in the future.
I cannot stress the importance of education. I am a strong supporter of any bill that makes obtaining an education easier and less of a financial burden. The Higher Ed, Lower Debt bill holistically addresses the student loan crisis through putting money back in our state economy, providing useful information for the state, and financially supporting Wisconsin borrowers. The Higher Ed, Lower Debt bill address the concerns of Wisconsin citizens were the Federal government fails.
As always, I am here to serve.