Busting Wisconsin’s Student Debt Bubble
June 11, 2019
- With new proposals to solve the $1.56 trillion student debt problem, is the cost for taxpayers worth the benefit for students?
- What can Wisconsin learn from Tennessee’s model for solving the student debt crisis?
- Future students are counting on us to find better ways to pay for college, so how does Wisconsin plan to make college more affordable?
Did you know there’s $521 billion more in student loan debt than the entire amount of credit card debt in the United States? 45 million Americans owe $1.56 trillion in college debt, and 40 percent of all borrowers will default on their student loans by 2023. In Wisconsin alone, residents owe more than $24 billion in student debt. The statistics are alarming. But what’s potentially even more alarming is the cost to fix it.
Are we facing a giant that’s just too big to tackle?
As we’ve reported before, student loans don’t just affect students. They affect millions of parents, grandparents and other supporting family members that take out loans to send their children to college. It’s estimated that Wisconsin has more than 900,000 residents with student loan debt, and that doesn’t even include all of the family members affected as well. But if going to college is the golden ticket to get a good-paying job, why do so many Americans feel cheated by their student loans?
Presidential candidates propose big solutions, but some come with big costs.
Americans have never been this burdened by student loan debt. With the cost of college increasing nearly eight times faster than wages, Democratic Presidential candidates are jumping on the solve-student-debt bandwagon. If elected, one of them could even become the first President to have student debt. But there’s one important question candidates’ proposals need to answer: Is solving the crisis a burden that should fall on taxpayers’ wallets? Or is there another way to fix it?
Elizabeth Warren’s student debt forgiveness plan is estimated to cost (according to her campaign) $640 billion dollars, and it proposes tuition-free college for future students which would cost another $1.25 trillion over ten years. With a $22.22 trillion national debt bill, other Democratic candidates like Amy Klobuchar find the plan outside the realm of reality.
“I wish — if I were a magic genie and could give that to everyone and we could afford it, I would.” – Sen Klobuchar said during a February town hall.
Is there a middle-ground solution?
College grads shouldn’t have to pick up two extra jobs to make a dent in their debt. But that doesn’t mean taxpayers should be responsible for a broken system that profits off of students with crippling debt either. One thing we know is that candidates and lawmakers agree that student debt is a drag on the U.S. economy. It lowers consumer spending, slows business growth and delays homeownership. The best way to solve the student loan crisis without piling onto the national debt or asking taxpayers to fit the bill is to come up with creative, moderate solutions.
Just look at the success of the “Tennessee Promise” program
Regardless of what you think about the student debt crisis and its potential solutions, there’s one fact we can all agree on: the American University system needs a rehaul. Luckily, there are some states where creative solutions offer hope to the rest of the nation. Tennessee, for example, created an endowment from lottery funds that goes towards covering all tuition costs not paid by the federal government for two year and technical college degrees. The state cleverly found a way to repurpose funds in order to give high-school students two years of tuition-free community college or technical school.
And Purdue University, helmed by former-governor Mitch Daniels, is now allowing students to finish degrees in three years instead of four, potentially lowering student debt by 25 percent for many students.
Maybe there’s a better way to think about college?
With pay-to-play fraud schemes that help popular TV personalities send their kids to Ivy League Schools and universities selling ‘college experience’ more than an actual education, many would agree it’s time to stop the problems that plague higher education in America. Students are relying on lawmakers to cut the cost of education and make the system fairer. Here are some of the potential solutions that could help lower the cost of education:
- Work Colleges: require students to work on campus or in their community as a way to lower the cost of tuition
- Co-operative education: students alternate semesters, one taking courses and one working at paid internships, to help them learn and earn simultaneously
- Community college first: get general education classes out of the way while supporting your local school, then transfer to a larger University to take classes targeted to your field of study
Wisconsin is working on solutions
Wisconsin’s representatives are mulling over ways to make college more affordable while keeping students in-state. According to Wisconsin Senator Dale Kooyenga, “we need to hit that sweet spot that says students should have equity in their education, but at the same time, education should be affordable.”
One way to mitigate the cost of college is to allow students to refinance debt after graduation, which could help them get a better interest rate. Governor Evers’ budget sets aside $50,000 to study whether a state refinancing program is a good idea, but some are concerned that refinancing, while helpful, is not enough to reduce the cost of college once and for all. “There may be people for whom refinancing to a lower rate will help them, but it will likely help them only marginally,” said Kristin Blagg, research associate at the Urban Institute.
Tracking the issue and reporting the progress
Solving the student debt problem and lowering the cost of college for future students will take time, patience, and bipartisan support. The issue is ongoing and we are committed to bringing you the latest on the college crisis as it develops.
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