by Scot Ross
Is there new hope for the 753,000 Wisconsinites with federal student loan debt and the tens of thousands more with debt from private loans for their schooling?
In recent years borrowers have been squeezed by a system in which cutbacks in state aid have led to skyrocketing tuition while big banks, and even the federal government, have been profiteering on the interest on student loans. The result is over $1.2 trillion in student loan debt that is dragging down our economy and standing between 40 million Americans and a fair shot at the middle class.
Borrowers have done the right thing - they've worked hard to get an education or job training, and they've taken on the personal responsibility of paying for it. They're not asking for a bailout. But they deserve a system that treats them fairly and doesn't turn their education from a path to the middle class into a multi-decade debt sentence.
In Wisconsin the response to the crisis from Gov. Walker has been silence and indifference interspersed between the largest cuts to public education in state history and hiking UW System tuition to the tune of $200 million plus for students attending over his four-year term.
Meanwhile the Republican controlled legislature gave borrowers the opportunity to offer their support during public hearings on the Higher Ed, Lower Debt Act (Senate Bill 376 and Assembly Bill 498). But when it came time to count the votes, Republicans voted along party lines to keep the full legislature from having the opportunity to debate and vote on the bill.
The good news is there appears to be new hope on the horizon. Gubernatorial candidate Mary Burke has included some of the common sense solutions from the Higher Ed, Lower Debt Act in her newly released "Invest for Success" jobs plan.
Specifically Burke calls for creating a mechanism to allow Wisconsin borrowers to refinance their student loans to take advantage of lower interest rates, just like you can with a home mortgage or other consumer loan. And Burke would allow borrowers to deduct student loan debt payments on their state taxes, just like you can with home mortgage loan interest.
One might ask: why would student loan debt relief be included in a jobs plan? Because, it seems, Mary Burke gets it.
Original research by One Wisconsin Institute found that borrowers with an undergraduate degree in Wisconsin were making average payments of nearly $350 per month for almost 19 years. The impact of this debt is dramatic and negative for the entire state economy. For example, over $200 million new car sales are lost annually and rates of home ownership are significantly lower among student loan borrowers versus their economic peers without debt.
Just think of the economic windfall we could reap by reversing this trend.
Making higher education and job training more affordable will help state businesses get the well-trained workforce they want.
Offering relief to borrowers will boost consumer spending here in Wisconsin instead of sending interest to Wall Street banks.
And freeing a generation of well-trained, well-educated Wisconsinites from the chains of crushing debt will spur the entrepreneurism and small business creation needed to break out of our economic doldrums.
Common sense reform can restore fairness to a student loan system gone awry and give our economy a needed boost. All that's needed is the political will to invest in the people of Wisconsin and let them succeed.
Luckily it seems that some people are starting to get it.
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Scot Ross is Executive Director of One Wisconsin Now and One Wisconsin Institute, organizations leading the effort for student loan debt reform in Wisconsin and members of the national Higher Ed, Not Debt coalition.