By Miles Brown
Sept. 23, 2014
I recently came across an editorial in the University of Wisconsin paper The Badger Herald, written by the chairman of the UW College Republicans entitled “What the Democrats get wrong about the student loan crisis.” It was nice of Charles Hoffman to address the issue of student debt, as this is an issue that affects over 40 million Americans and their families, but the whole argument stands on such shaky ground that I felt compelled to respond.
The article takes issue with Wisconsin’s “Higher Ed, Lower Debt” bill introduced by Sen. Dave Hansen (D-Green Bay) and Rep. Cory Mason (D-Racine). Charles does not accurately describe the bill — he only dismisses it, and offers a vague explanation of why tuition freeze is a better solution. Allow me to explain the bill for him.
Basically, the bill would have created a state Student Loan Refinancing Authority allowing student loan borrowers to refinance those loans at “much lower” interest rates, just as homeowners do with mortgages. He may look at this bill as “increasing bureaucracy,” but I look at the establishment of the refinancing authority as finally allowing those crippled by student loan debt the freedom to take control over their own futures through refinancing.
In describing the bill, Hoffman says, “One could also argue that this bill would shift the liability of student loans from the federal government and private banks to Wisconsin taxpayers.” One could also argue that the moon is made of spare ribs, but without proper evidence, that would sound just as outlandish as the things Charles has just said.
As bill co-author Rep. Cory Mason has said, “While there would always be some risk to taxpayers in the event of defaults, most of that risk would already be factored into interest rates, meaning that the bulk of the risk is shouldered by borrowers.”
While Hoffman is right that tuition is a lion’s share of the total cost of attendance and that higher tuition does cause student loan usage to increase, the tuition freezes he offers as an alternative do absolutely nothing to address the biggest issues facing college graduates today: The existing loans with very high interest rates they’ve already taken out to go to school. In some cases, student loan borrowers are being charged interest rates up to 12 percent. Lower interest rates mean more money in the pockets of Wisconsin’s more than 753,000 student loan borrowers, and more money being spent in the economy.
As any number of articles will tell you (I recommend this one), student loan rates are on average double, even triple, the rates on average of cars and mortgages. It’s the legislatures and congress that set these rates, and they count for 85 percent of the trillion-plus we all owe in student loan debt. This bill aimed to reverse that troubling trend and work on getting those rates lowered. These tuition freezes could go on for centuries, but the bottom line is that no matter what the cost of tuition is, as long as the high loan rates are not dealt with the student loan debt issue will never go away.
Wisconsin Gov. Scott Walker and his supporters ignore existing student debt in favor of only addressing future debt, allowing Walker to do the literal bare minimum to help students. It’s also incredibly short-sighted and naive to assume that the issues with student loan debt can be erased solely by banning a slight increase of tuition for a few years.
I think one of the larger points that often eludes people when discussing these issues is the fact that Walker’s tuition freezes and previous educational policies are not geared towards people who come from predominantly poor backgrounds. This is not to say that a tuition freeze wouldn’t help low income students take out fewer loans, because it certainly would, but a tuition freeze doesn’t reach the students taking out loans for their education the way helping them refinance those loan rates could. It also doesn’t help students who paid tuition with loans a while ago.
The perpetuated ignorance regarding the “Higher Ed, Lower Debt” bill, combined with the increase in loan rates for federal subsidized loans by congress tells me that giving the poor increased access to a quality, low cost education is not a priority for Walker and other Republican legislators. Some of these students come to college with nothing and take these loans out because the alternative is embarking upon a decade-plus career at McDonald’s. Others don’t have that crucial built in support system or parents who help pay their tuition. They go it alone because that’s the only thing they can do. It seems that Walker and his supporters want to punish them because of that.
While the “Higher Ed, Lower Debt” bill would have been incredibly helpful and put many students on the road to being debt free, it was killed without even a second glance by Wisconsin Republicans. Allowing borrowers to refinance their loans like one would a car or mortgage is a proposal that makes total sense for parents, current students and graduates. More vitally, it’s something that ensures college being a possibility for ALL of the young people in this state, not just people who fit into Scott Walker’s vision for Wisconsin.