As part of Gov. Tony Evers' proposed budget, Lt. Gov. Mandela Barnes announced a plan that could potentially help UW System graduates restructure their student loans Monday.
During a joint press conference at the state Capitol, Barnes proposed creating an advisory group devoted to determining the feasibility of a state-run student loan refinancing authority in collaboration with the Wisconsin Department of Financial Institutions, the State Treasurer and the executive secretary of the Higher Educational Aids Board.
Joining 12 other states with similar programs, the proposed authority would allow UW System graduates to refinance their student loans similarly to a mortgage, but some legislators see the program as a misuse of funds.
“Governor Evers wants to spend $50,000 to study something we already know won’t work,” Rep. Dave Murphy, R-Greenville, said in a press release. “Wasting state taxpayer dollars to review a proposal the legislature already held numerous hearings on is simply political pandering.”
Murphy criticized Evers’ decision to not address ways of limiting higher education costs in lieu of focusing on reducing student debt, which he believes the federal government is more efficient in.
Regardless, Barnes stressed the importance of the proposal in providing relief to all hard-working Wisconsinites.
“It’s time for us to be serious about this issue … and the multigenerational threat that it poses to our entire economy,” Barnes said.
Student loan debt in Wisconsin has increased to over $24 billion. Seventy-two percent of UW System students were forced to take out a loan after graduation, averaging $30,000 in 2017.
The rising debt, according to Barnes, affects Wisconsin residents of all ages and walks of life from achieving mobility and being productive consumers.
“There are $24 billion that stand between thousands of Wisconsinites and their ability to attain … the middle class they were promised if they were only to continue their education,” Barnes said. “People who are into their retirement are still dealing with student loan debt, stuck and prohibited from making the decisions that would help them be more active participants in the economy.”
For some Wisconsin lawmakers, the idea of a state-run refinancing authority is personal.
State Treasurer Sarah Godlewski faced a similar situation as many of her constituents. Following her college graduation, Godlewski faced $75,000 in debt at a nine percent interest rate.
“I wish that my story was an exception. But it’s not,” Godlewski said at the press conference. “How can young people get ahead if they can’t even keep up?”
The proposed study, which was granted $50,000 under Evers’ 2019-’21 biennial budget, is required to submit a report with recommendations to the governor and state legislature by Oct. 1, 2020.
Pending the report’s considerations and approval from the Legislature, the refinancing authority could be incorporated in the 2021-’23 budget.