David Michael Miller
It’s not a pretty picture.
A new study by LendEDU shows the average debt of Wisconsin’s college graduates rose from $19,836 to $29,451 from 2007 to 2017, an increase of 48.5 percent — exceeding the increase in 30 other states.
But the picture was actually even worse because more of Wisconsin’s students — 64 percent — left with debt, a higher percentage than in all but six states. Wisconsin has gone from 16th highest in the percent of students with debt in 2007 to 7th highest in 2017.
The state’s flagship institution, UW-Madison, actually did somewhat better: average student debt rose from $21,018 to $27,979, up 33 percent. Edgewood College, the other institution in Madison measured by the study, saw student debt rise from $27,885 to $35,300, up 27 percent.
But across the state, other UW System universities saw staggering increases in debt. At UW-Milwaukee, the percent of students leaving with debt rose from 58 percent to 76 percent over that 10-year period, a bigger hike than at 834 of 922 institutions tracked by the study. And the average loan amount for UWM borrowers skyrocketed from $12,639 to $37,131, up nearly 194 percent, rising faster than all but 21 of 922 institutions measured.
Other public colleges in the state seeing huge increases in average student debt include UW-La Crosse, up more than 120 percent, and UW-River Falls, up more than 119 percent — both ahead of more than 850 colleges in the rate of increase in debt.
College student debt has been a key issue for Democrats over the eight-year period when Republicans held control of the state Legislature and governor’s office, under Scott Walker. Democrats introduced the Higher Ed/Lower Debt bill in 2013 and again in 2015 and 2017, which would have created a state authority to help graduates refinance student loans, much like mortgage financing, with no support from Walker and Republicans.
“What they fail to realize is that by ignoring this crisis they are not just hurting young people,” charges State Sen. Dave Hansen (D-Green Bay), a co-author of the bill. “They’re hurting car dealers, home sellers, restaurants, and all kinds of local businesses because the money being sent to Wall Street to pay interest on student loans isn’t being spent here on Main Street.”
Indeed, an earlier study by LendEDU found the total outstanding student loan debt had hit $1.52 trillion by 2018, making it the second highest form of debt in the U.S., second only to mortgages, and leaving 63 percent of borrowers delaying the purchase of a home or a car (47 percent) marriage (28 percent) or starting a family (34 percent).
Walker’s response to this issue, Democrats complained, amounted to telling borrowers to “call a bank.” But that’s not an option for most borrowers, because banks require things like a long work history, low debt-to-income ratios, and the ownership of a home or other significant assets.
The state authority proposed by Hansen could issue bonds and provide loans under the program at the lowest possible interest rate that is still sufficient to cover the program’s expenses. The state program would not be run at the profit margin of a bank, making it easier for borrowers to refinance at a lower interest rate.
Gov. Tony Evers wants to set aside $50,000 to study developing a state authority to refinance student loans. He’s proposed creating an advisory group to include the state treasurer, executive secretary of the Higher Educational Aids Board, and the secretary of the state Department of Financial Institutions, to report to the Legislature on structure, projected costs and staffing needs of the proposed authority.
The Republicans’ response is chilly. Sen. Dale Kooyenga (R-Brookfield), who chairs the Senate Committee on Universities, Technical Colleges, Children and Families, says he’s open to studying the possibility, but the state would benefit more from examining the underlying costs of education. “Education should be affordable,” says Kooyenga.
But that would require the state to move back some 40 years to a time when education was affordable for average people without big loans. The reasons college is vastly more expensive today are many, including that state subsidies and federal Pell Grants haven’t kept up with rising costs, and there are no easy solutions.
In the meantime, a state authority to refinance loans could significantly lower monthly costs for borrowers. Twelve states now operate a student loan refinancing program, the National Conference of State Legislatures reports.
The idea of helping students refinance their loans is very popular with Wisconsin voters as one poll found, with 85 percent of Democrats, 70 percent of Republicans and 82 percent of independents favoring the idea. Few issues are likely to get such bipartisan support.
Bruce Murphy is editor of UrbanMilwaukee.
