Wisconsin's Student Debt Dilemma: How Will It Be Repaid?

The following is an Op-Ed article written by Michael Brown, Research Analyst at LendEDU and published in partnership with Wisconsin Patch. Learn more about LendEDU here.

MILWAUKEE, WI — Taking out student loans is a requirement for many given the rising cost of college over the last two decades. Given the increased need for student loans, the total outstanding debt has increased as well.

Student loan debt is not a pressing issue in Wisconsin alone, but instead impacts nearly 45 million
borrowers currently owing more than $1.5 trillion nationwide. However, Wisconsin students and graduates have experienced a noteworthy increase in the amount of debt they take on to fund a college education.

According to data collected between 2007 and 2017 and analyzed by LendEDU, the average debt per borrower figure in Wisconsin has grown from $19,836 to $29,451 over the ten-year period. This represents an increase of 48.47 percent, ranking the state 31st when it comes to lowest increases in the debt per borrower figure around the country.

Wisconsin has also experienced an increase in the percentage of graduates with student loan debt,
increasing from 63.31 percent in 2007 to 64.35 percent in 2017. The 1.04 percent increase over the decade is the 33rd-lowest in the nation.

A Brief Look at How Student Debt Has Changed at Some Wisconsin Colleges

The statistics above highlight the growing issue of student loan debt among Wisconsin students, but some colleges have fared better than others.

The Milwaukee School of Engineering, for instance, has had the lowest growth of debt per borrower, moving from $34,862 to $38,421, or 10.21 percent. The University of Wisconsin Madison has increased per-borrower debt 33.12 percent, from $21,018 to $27,979, while the University of Wisconsin Green Bay experienced a 40.65 percent increase, from $16,114 to $22,664.

Carroll University has a more notable increase at 64.27 percent, with per-borrower student loan debt increasing from $21,794 to $35,802 over the ten year time frame.

What Has Wisconsin Already Proposed to Help Mitigate the State's Student Loan Debt Situation?

The state of Wisconsin’s student loan debt problem has prompted some action on the part of lawmakers in the state. A handful of initiatives have been sparked in the last few years, with the intent of slowing down the growth of student loan debt among Wisconsin residents.

A State-Run Student Loan Refinancing Authority

As part of the 2019-2020 budget proposal, Wisconsin legislators are requesting funding for a committee to research the creation and implementation of a statewide student loan refinancing authority. This initiative would provide for a state-run agency that helps students with either federal or private loans refinancing at a lower interest rate. The refinancing authority would not necessarily help in reducing the amount of debt Wisconsin students need to finance their education; however, it may make student loan repayment more affordable in the long run.

The Higher Ed, Lower Debt Bill

Additionally, a recent Senate bill, the Higher Ed, Lower Debt proposal, offers relief to Wisconsin residents with student loan debt. The bill provides students with the opportunity to deduct student loan payments from their income, creating tax savings. The initiative also provides refinancing opportunities for students at lower interest rates, and encourages greater financial literacy surrounding student loan borrowing.

The bill, like the refinancing authority, does little to lower the debt-per-borrower statistics, but it may offer some respite from burdensome student loan payments each month for qualified borrowers.

What Else Can Wisconsin Lawmakers Do?

Several other states with increasing student loan debt have worked toward solving the problem from other angles. Wisconsin lawmakers may consider some or all of the following to help borrowers keep debt loads low. This, in turn, will boost the Wisconsin economy and also lay the groundwork for less financially- strapped graduates who want or need to contribute toward other financial goals.

Limit the Cost of College at WI Colleges And Universities

The most powerful step toward progress in lowering student debt averages involves limiting college and university tuition rates. Over the last several years, Wisconsin schools, like many others in the country, have consistently increased the cost of attending, by amounts far higher than national inflation rates. This causes students to take out more student debt to cover the growing expense.

Lawmakers could propose initiatives to put a cap on tuition rates for colleges and universities in the state, which would have a direct impact on student loan debt per borrower statistics.

Subsidize Student Loan Payments for WI Residents

Another recourse for stagnating the student loan debt crisis in Wisconsin may include subsidizing student loan payments for resident students and graduates. Subsidized loans are available currently through the federal Department of Education’s student loan program. This means that students are not responsible for paying accumulated interest on loans while they are deferred or in a grace period. If Wisconsin were to enact a similar initiative for resident borrowers, this could lower the total amount owed by students once they graduate.

Offer More State-Based Scholarships And Grants

Finally, offering more state-based scholarships and grants would have a direct impact on the amount of financing students in Wisconsin need to fund their education. Scholarships and grants do not need to be repaid, and they can be offered based on merit or financial need. Providing more options for state-based awards means students have less of an out-of-pocket expense for attending a Wisconsin college or university.