During commencement season this spring, credit reports and payment plans are handed out as readily as degrees at universities across the country. Student debt has skyrocketed as education becomes more expensive.
Nationwide, student loan debt reached $1.2 trillion in 2013, with 67 percent of students graduating with an average of $26,000 in debt. Wisconsin ranks 10th in the nation for number of college students in debt and with the proposed $300 million cut to the University of Wisconsin (UW) System, tuition increases and decreased state aid pose further challenges to the problem.
“It’s having a greater impact on our economy than most people recognize,” said Sandy Duckett, CEO at We Are HOPE, Inc. in Sturgeon Bay. We Are HOPE works with the Job Center of Wisconsin to help residents in Door, Kewaunee and Brown counties find employment.
The group conducted an online survey about student debt and will present their findings at a conference on June 1 at the Meyer Theatre in Green Bay.
“The reason we did it in Green Bay is because it is not just a local issue. This is a statewide and national issue and we need to bring this to the attention of legislators as well as our community leaders,” said Duckett.
Duckett declined to describe the findings of the study, but explained that the issue reaches further than a few college graduates with their summer jobs.
“We still have not come out of the recession of 2008. The cost of education is one of the factors. It seems that things have been more challenging and difficult. You always need to find the root cause and we believe college debt is the root,” said Duckett.
U.S. Secretary of Education Arne Duncan said in an interview with CNN that relieving the burden of debt will allow graduates to spend money on houses and cars instead of monthly payments.
“Going to college is the most important thing folks can do to enter the middle class…but sadly it’s never been more expensive. It can’t just be for rich folks,” said Duncan.
Prior to 2010, private banks offered many loans but the loans were guaranteed by the federal government. Following a bill passed in 2010, the U.S. Department of Education directly funded all federal loans. Duckett believes this to be a major cause of the student loan problem.
“Interest rates are now higher and people can’t refinance their loans. Some people are taking out loans that they shouldn’t be taking. There’s a lack of career guidance,” said Duckett.
With federal student loans, there is no credit check or need for a cosigner to ensure timely repayment of the debt. Most college students don’t have a credit history or assets. There is simply a perception that, with a college degree, graduates will make enough money to pay their loans.
The issue is especially prevalent in Door County, where the seasonal work force is made up of many of these college students and recent graduates.
Senator Dave Hansen (D-Green Bay) and Representative Cory Mason (D-Racine) entered a petition into the Wisconsin Legislature to make higher education more affordable for Wisconsin graduates. The Higher Ed, Lower Debt Bill would allow students to deduct loan payments from income tax and allow students to refinance their loans at lower interest rates.
Every Democrat in the legislature co-sponsored the bill but it received no support from Republicans. Senator Hansen and Rep. Mason will bring the bill to the 2015-16 session of the Wisconsin State Legislature.
At the conference in Green Bay, Duckett and her team expect some dissonance with the higher education institutions with a stake in the problem.
“There are many educators that are not going to be very happy at this news conference,” said Duckett. “They are going to feel uncomfortable because they put many families in crisis. Education is supposed to open doors. Based on the survey results, education has probably closed more doors for some people.”
The conference will take place at 9 am on Monday, June 1, at the Meyer Theatre in Green Bay.