Wisconsinites owe a bundle of money in student loan debt.
Around 70 percent of Wisconsin’s current college students will owe money on loans when they graduate, according to the Institute of College Access and Success.
Each side of the political aisle thinks it has the best solution.
Governor Walker, in his State of the State address Tuesday night, touted the fact that he froze tuition in the UW system for four years. Now, he and legislative Republicans want to let people deduct all the interest they pay on student loans, and create more internships and financial counseling programs for existing students.
“We have a package of ideas to help offset the price of college and reduce the costs of student loan debt,” Walker said.
Democrats say the GOP plan doesn’t provide enough relief for people who owe tens of thousands of dollars. They’ve proposed allowing students to refinance their loans at lower interest rates.
All lawmakers can agree: college isn’t cheap. How did we get here?
‘College affordability’ is not a new buzzword. People have always worried that a higher education would be pricey. It’s why the U.S. created the financial aid system about 50 years ago. It relies on two actors: states and universities.
States are supposed to contribute money to keep public universities going, and they are supposed to keep their prices reasonable. It was around the 1980s when one of those promises started to slip.
“Institutions started to think they were offering a really good deal, and that they could probably charge more and people would still pay it,” says Sara Goldrick-Rab, professor of educational policy studies at UW-Madison. “Lo and behold, they learned that they were right.”
Goldrick-Rab says people didn’t worry too much at the time, because their incomes were also rising. Plus, the majority of people who went to college in those days were from households with means.
Then came the 1990s and the state domino tipped.
Rising costs for healthcare and k-12 education meant budgets were tighter – and higher education didn’t top the state’s priority list.
Next, the 2000s arrived and the era we all know as the “Great Recession.” Incomes fell, state budgets got even smaller. Goldrick-Rab calls it a “perfect storm.”
“States aren’t paying what they used to, colleges and universities have convinced us that more expensive is better, yet most people really don’t have the resources. And the only financial aid offered to them is student loans,” Goldrick-Rab explains. “And that’s how we get to today.”
Today, the White House estimates that in Wisconsin, 812,000 residents carry outstanding debt on federal student loans. Collectively, they owe more than $18 billion dollars.
Goldrick-Rab insists the responsibility for shrinking those numbers falls to the state – not the schools.
“These institutions don’t actually have that much power over their money, but who has power over the money is the state,” she says. “And the state is deciding to spend less on a per-student basis than ever before, leaving families to pay more on a per-student basis than ever before.”
While Goldrick-Rab says she applauds some of Gov. Scott Walker’s proposals, she doesn’t believe they address the core problem that states need to shoulder more of the financial burden college poses.
Lawmakers plan to discuss Walker’s initiatives later this month, with Republican leaders claiming there’s only so much they can do.