Congress Must Act to Prevent Student Loan Rates From Doubling
More than ever, a college diploma unlocks economic opportunity, provides students with a wealth of new skills and knowledge, and encourages innovation and growth. But more than ever, it also comes with a mountain of student loan debt.
We have an undeniable student debt crisis in the United States. Our total student debt has tripled over the past eight years and has now surpassed the $1 trillion mark -- exceeding all credit card debt in this country. Every second, Americans' student loan debt increases by $2,854. And yet, in less than a week, this crisis threatens to get even worse.
If Congress does not act by this Monday, July 1st, nearly 160,000 Wisconsinites will see their student loan interest rates double from 3.4 to 6.8 percent. This translates to an increase of almost $1,000 in student loan payments a year per student.
With this deadline looming, we have seen little movement in Congress to address this issue. Just two weeks ago, I joined my Democratic colleagues to try and force a vote to halt the doubling of student loans, but we were blocked in our efforts by Congressional Republicans. This inaction is unacceptable. While some of our young graduates may have mastered the art of procrastination when finishing up their last essays and cramming for their finals, this is not a practice we should see from our elected leaders on such an important issue.
Wisconsinites deserve better. Tuition rates at four-year colleges have risen by more than 32 percent in the last decade. Sixty-seven percent of Wisconsinites pay student debt, at an average of nearly $400 a month. Because of these exorbitant rates, it will take the average citizen in our state almost 19 years to pay off his or her student loan debt from a four-year university.
We can't afford to keep college unaffordable for two main reasons. First, at a time when a college degree is more important than ever to obtaining reliable employment, we are in grave danger of pricing too many of our young students out of a college education.
A well-educated populace is the backbone of our middle-class. We know that to compete for the jobs of the 21st century and thrive in a global economy, we need a growing, skilled and educated workforce, particularly in the areas of science, technology, engineering and math. Americans with bachelor's degrees have half the unemployment rate of those with a high school degree. By making college unaffordable and student loans unbearable, we risk deterring our best and brightest from pursuing higher education and securing a good-paying job.
The second major consequence of student debt is how it limits our student's ability to participate in our economy.
According to a new study from WISPIRG, if Congress does not prevent student loan rates from doubling, Wisconsinites will have to pay $145 million a year more in additional student loan costs. That is $145 million that could go directly into the Wisconsin economy -- to purchase goods and start businesses -- at a time when the Badger State cannot afford to be stifling growth. A study from the One Wisconsin Institute has also shown that because of the stifling student loan debt, Wisconsinites are less likely to buy new cars and purchase a home.
It is clear that student loan debt is about more than just the debt itself. It is about how this debt affects the decisions our graduates make as they embark on their careers. It is about the risks they do not take, the opportunities they do not pursue, and the businesses they do not build because they have to worry about making these payments.
As Diana, a Wisconsinite with student loan debt shared with One Wisconsin: "I graduated from a four-year college in 2006. Today, 7 years later, my loan payments are over $600 per month...That is money that's not going into our retirement funds, not going towards a new home, not going towards a child's college fund, and certainly not going back into the economy in a productive way."
Her story is troubling but not unique. For many of the thousands of students who graduated last month from places such as UW-Madison and Beloit College, student debt will be a very real and painful burden they carry with them for much of their life. We need a long-term solution to our student debt crisis, one that allows students to refinance their student loans, just like most people can refinance a mortgage or car payment.
But in the meantime, we can, and we must, act now to ensure we do not increase the debt burden for our students by allowing the student loan rates to double. We have one week to get something done -- to freeze student loan interest rates and send a message that we refuse to balance our budgets on the backs of our students.
An unaffordable college education is an unsustainable future for our country.