The student-loan debt crisis in the United States grew twofold, from $675 million in 2009 to $1.52 trillion in 2019. This crisis has been caused by a combination of falling state funding for college and grant aid, coupled with skyrocketing college costs. The vast majority of student-loan debt is composed of federal loans that cannot be refinanced.
In Wisconsin alone, it’s estimated that more than 900,000 people carry some student loan debt. That’s 21 percent of Wisconsinites older than 20 years of age. Sixty-four percent of Wisconsinites graduating from a public or nonprofit private college in 2018 had student debt, and the average amount of that debt was $31,705. In 2018, Wisconsin ranked 13th in the percentage of graduates with debt and seventh in the average amount of debt.
There are many reasons why the public should be concerned about this crisis.
First, it directly affects such a large number and such a large percentage of Wisconsinites. It’s the root cause of the growing inequality in our country.
Second, the enormous amount of student-debt money has depressed the sale of large-ticket items such as homes and cars, slowing economic growth while it erodes the middle class. Student-loan debt is now the second-largest form of debt, exceeding credit cards and automobile-loan debt.
Third, it contributes to the college-dropout rate and reduces access to higher education – long regarded as the great equalizer, the ladder enabling upward mobility – and it undermines obtaining the American Dream, thereby contributing to inequality. A 2013 study found that the impact of student debt of $53,000 on a household’s total lifetime wealth loss was $207,000, primarily due to lost savings and investment early in people’s working lives.
Gov. Evers has created the Student Loan Refinancing Task Force (Executive Order #67), which will make recommendations by Oct. 1, 2020. If the loans are income-contingent loans, we can start reducing inequality and rebuild the middle class in Wisconsin. We need to support Gov. Evers’ task force.
Judy Ann Ritter
Sturgeon Bay, Wisconsin