Student loan debt has become a major financial burden for families and students. At $1.2 trillion, student loan debt has exceeded credit card debt in America and is second only to mortgage debt.
As many families across Wisconsin continue to struggle with the growing burden of student loan debt, new legislation designed to address this crisis is being proposed by a group of Democratic state legislators.
State Sen. Jennifer Shilling (D-La Crosse) is a co-author of the new “Higher Ed, Lower Debt” legislation. This proposal, Senate Bill 376, offers solutions to many issues that were brought up at recent public hearings on college campuses across the state. Locally, state Representatives Jill Billings (D-La Crosse) and Steve Doyle (D-Onalaska) are also co-sponsors of this bill.
“We can’t afford to sit on the sideline as our next generation is saddled with massive debt,” said Shilling. “Senate Bill 376 is an important first step toward providing real relief to Wisconsin families, and I hope that we can find bi-partisan support to address this growing crisis.”
Senate Bill 376 will allow individuals with student loan debt to refinance their loans at lower interest rates similar to options that are currently available for home and auto loan debt. It will also allow student loan borrowers to deduct loan payments from their income taxes – a move that will save the average borrower between $172 and $392 a year.
Additionally, Senate Bill 376 will provide students and parents more information about higher education loan options so that families can make informed financial decisions.
“Too many people are finding it difficult to make ends meet as a result of overwhelming student loan debt,” added Shilling. “We need to make higher education more affordable and prevent Wall Street banks from charging unreasonable interest rates that bury families and young adults in debt.”
Studies have shown that the growing student loan debt crisis has a direct impact on the economy. A recent survey by the non-partisan Institute for One Wisconsin found that adults with student loan debt are much less likely to buy a new car or purchase a home – two key driving forces of manufacturing and construction jobs. The data compiled by the Institute for One Wisconsin indicates that the impact of student loan debt could reduce aggregate new vehicle spending by as much as $201.8 million annually in Wisconsin.
The increasing cost of college and unmet financial assistance have been blamed on the recent growth in student loan debt. 137,000 Wisconsin students and families annually rely on financial aid to help pay for college. However, due to the recent state budget and a freeze on financial aid, approximately 76,000 financially eligible UW and Technical College students will be denied aid.
According to the Institute for One Wisconsin survey, individuals with a bachelor’s degree who graduated with student loan debt were making average monthly payments of $350 on loans with an average term of nearly 19 years.
The student loan debt crisis has grown to affect more than just students and young adults. The New York Times recently reported that the fastest growing demographic group with student loan debt is individuals over the age of 60, and data from the Federal Reserve Bank of New York indicates that $36 billion in outstanding student loan debt is owed by those ages 60 and over. It is estimated that 120,000 Americans on Social Security will have their payments garnished this year due to outstanding student loan debt.
Senate Bill 376 has been referred to the Senate Committee on Universities and Technical Colleges where it is currently waiting to be scheduled for a public hearing.