Bruce Murphy
Murphy’s Law

Wisconsin Student Debt Is Soaring

It rose 74% in 10 years, faster than all but six states. What is Walker's solution?

By - Jan 19th, 2016 12:47 pm
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UWM Union. Photo by Dave Reid.

UWM Union. Photo by Dave Reid.

Wisconsin has truly become a red state, not for elections, but for its college graduates. As recently as a decade ago this was a state where college graduates had a lower average level of debt. Not any more.

From 2004 to 2014 the average debt of college grads in Wisconsin soared, rising from $16,560 to $28,810. That was a jump of 74 percent, a bigger hike than all but six states. Wisconsin now ranks higher than all but two states in the proportion of students — 70 percent — with debts.

New Hampshire led with 76 percent and Idaho was second with 72 percent of graduates with debt. Delaware graduates had the most average debt, $33,808 and Utah grads had the least, $18,921.

These figures come from a report by the Institute for College Access and Success, a non-profit which annually computes student debt levels.

“Student debt is still rising,” the Institute notes. “Too many students are left with debts they can’t repay, particularly if they don’t graduate, and too many end up in default.”

The big reason for this is that states like Wisconsin are slashing their spending on higher education: “After adjusting for inflation, per-student state spending on public colleges decreased 12 percent over the last decade, while the per-student revenue coming from tuition increased 43 percent,” the study notes. As a result, students and families are paying an ever higher portion of the costs of college.

Another recent study, by an advocacy group called the Young Invincibles, found students and families now pay 51 percent of the costs of college, up from 36 percent in 2008. The proportion they pay ranges from 15 percent in Wyoming to 82 percent in Vermont. In Wisconsin they now pay 48 percent of the cost of a college education.

The study gave report cards to each state, and Wisconsin got an overall grade of “D+” for its support of public education, though that was ahead of 19 states that got an “F.” Wisconsin got an “F” in the category of “spending per student.”

Wisconsin was below the national median but above the national average in this category. This state cut spending on higher education by 18 percent from 2008 to 2014, compared to a 21 percent cut nationally, the study found. Louisiana was at the bottom, cutting spending by 41 percent and North Dakota was at the top, increasing spending by 38 percent.

Wisconsin spends $5,786 per student, the study found. That’s well under the national average of $6,311. Wisconsin also offers students less student aid: $507 in grants per student, compared to $589 nationally.

Wisconsin’s decline in higher education spending and increase in student debt is a long-term, bipartisan trend. Democratic Gov. Jim Doyle served for seven of the ten years (2004-2014) and Republican Gov. Scott Walker for the other three years during which the debt level rose so quickly.

The Baird investment firm did a report warning of the consequences of rising student debt, noting the 2013 American Student Assistant’s survey, which found this debt “is profoundly impacting the way student borrowers make important life decisions as well as limiting their ability to achieve financial success.” The survey of graduates found:

-27 percent found it difficult to buy daily necessities;

-63 percent were unable to make large purchases 
such as a car;

-73 percent put off saving for retirement or 
making other investments;

-75 percent say it affected their decision or ability to 
purchase a home;

-30 percent say it had considerable impact or was the 
deciding factor, in their choice of career path;

-47 percent say it was the deciding factor, or 
had impact, on whether to start their own small business;

-29 percent have put off marriage;

-43 percent have delayed starting a family.

Baird found that 72 percent of UW-Milwaukee’s 2012 graduates left with an average debt of $32,371, and 25 percent of that debt was non-federal aid. An astounding 92 percent of  2012 Alverno College graduates left with an average debt of $41,405, and 16 percent of that debt was non-federal aid.

The non-federal aid is generally private loans, which the firm calls “one of the riskiest ways to finance a college education. You would almost be better off using a credit card. Private loans typically have high variable interest rates, as high as 18% in 2008, with loans rates often highest for those who can least afford them.”

It’s no surprise young voters are worried about the situation, but notable that the concern is bipartisan. A poll conducted by Young Invincibles found Millennial voters support increasing state funding for public colleges by an overwhelming 81 to 17 percent margin, with 92 percent of Democrats, 82 percent of Independents, and 67 percent of Republicans supporting increased funding.

Of course, the percent of Millennials who turn out at the polls is typically low, which is one reason states have been able to continue cutting funding for colleges.

The Higher Ed, Lower Debt Act, introduced by two Democrats, state Sen. Dave Hansen of Green Bay and Rep. Cory Mason of Milwaukee, and sponsored by 50 state legislators, would create a state authority to help graduates refinance their student loans, much like mortgage financing. A similar program was launched in Minnesota.

Walker, however, has opposed this bill. He is expected to tout his own plan, the proposed elimination of the cap on how much student interest can be deducted on borrowers’ state income tax in his state of the state speech tonight, as the Milwaukee Journal Sentinel has reported.

The liberal group, One Wisconsin Now, has charged that Walker’s stance proves he “is firmly in the pocket of the big banks.” Liberal blogger Saul Newton, the Executive Director of the Wisconsin Veterans Chamber of Commerce, has made a similar charge, noting that Walker received $4 million in campaign contributions from the banking and finance industry.

Walker has argued that a state refinancing plan wouldn’t work, so far without much explanation as to why. Millennials who do vote — and their parents — might be very interested to hear that rationale.

25 thoughts on “Murphy’s Law: Wisconsin Student Debt Is Soaring”

  1. wisconsin conservative digest says:

    This has been buidling for quite awhile. When the NY Times, Economists, Harpers, Atlantic and many other started on this about 8 years back, they centered in on the fact that the U systems have feasted on the students, driving them deep into debt, while they build castles on campus and load up with staff. Why has my tuition for pharmacy school, go up 65 times from 1962.
    This requires bipartisan reorganization of the system sadly wrecked by pat Lucey when he merged in 1971.

  2. podman says:

    I don’t see the downside to giving students the option to refinance. Anyone know?

  3. Tim says:

    WCD, why does it require “bipartisan reorganization”? Walker & republicans have all the votes they need to pass legislation; why have they done nothing but cut money to the system?

    It looks like they are showing us their priorities & education is not one of them.

  4. Vincent Hanna says:

    Goldrick-Rab insists the responsibility for shrinking those numbers falls to the state – not the schools.

    “These institutions don’t actually have that much power over their money, but who has power over the money is the state,” she says. “And the state is deciding to spend less on a per-student basis than ever before, leaving families to pay more on a per-student basis than ever before.”

  5. wisconsin conservative digest says:

    More baloney from the Left Vince, even the NY Times, Economist have knocked that down. Why is pharmacy tuition 65 times higher than what I paid in 1962? Big porked up projects, Stupid degrees, tons of more non teaching people, and general overall spending has gone up 10 times faster than the inflation. They have feasted off of the student loans with pork.

  6. Vincent Hanna says:

    So it is not true that “the state is deciding to spend less on a per-student basis than ever before, leaving families to pay more on a per-student basis than ever before?”

  7. AG says:

    VH, I don’t want to appear that I agree with WCD on anything… but to address just your statement in comment #6. It is not true, no. The reason the spending cuts hasn’t driven up student debt is because at the same time they implemented a tuition freeze. You can argue those cuts hurt the system in other ways, but student debt isn’t one of them.

  8. Vincent Hanna says:

    So Wisconsin is not spending less on a per-student basis?

  9. Vincent Hanna says:

    Shifted more costs to families. As I said.

    “Walker has indeed held the line on tuition, but not for out-of-state, international or graduate students at many of the 26 schools that make up the University of Wisconsin system. Students enrolled in the state’s 16 technical colleges have actually witnessed tuition go up an average 4.6 percent during his time in office.

    And while the governor put a cap on tuition for many Wisconsin residents, he supported hundreds of millions of dollars in spending cuts for public universities that shifted more of the cost onto families, leading many to take out loans to cover costs.”

  10. AG says:

    VH, linking to a blog isn’t helpful, especially when they spin things like saying $300 million is somehow 13% of 5.6 billion. Boggles my mind…

    But still, your point about out of state tuition going up is true. I just find that a bit nit picky. You really want to blame Walker and the GOP, I get that… but it’s hard to do when he’s held the line on tuition (in state, sorry). That errant comment about switching the burden to families doesn’t make sense unless you start parsing things out and ignore the fact that it’s peanuts compared to the previous administration.

    When Walker took office I think it said the average debt was something like 26k. That shows the vast majority of debt came under his predecessor. I don’t really care which party is in power, but I have to roll my eyes whenever people just on the “blame Walker” train. I’m sure on the lfip side, if student debt rose an additional 6k because of steadily increasing tuition, the same people would be here blaming Walker for that instead.

  11. wisconsin conservative digest says:

    Wisconsin is spending more per student now then when they did when I was in school, in 1962, but overall spending by the University is way up compared to inflation.
    Take spending per pupil, in 1962, when I was there. tuition $210/ years, compare that to now. Compare costs per student then and now, number of administrators then and now. Total spending compared to inflation, and you will see. It is not the Conservatives that started this but the Lefties that started asking questions. Now both liberals and Conservatives are asking questions.
    The Lucey merger plan has been disaster, and we said that at that time. Now even Ray Cross agrees with us as UW developed into a giant bureaucracy.
    Doyle cut more money in 8 years from UW then Scott did.

  12. Vincent Hanna says:

    AG you are putting words in my mouth. I never said anything about this being all Walker’s fault. You don’t “get” anything, but you sure are working overtime to defend Walker here today.

  13. Vincent Hanna says:

    I get it WCD. Things cost more today than they did in 1962.

    I am not defending the dreaded Jim Doyle (AGGHH!!) just as I never said it is all and only Walker’s fault.

  14. David Blaska says:

    State Rep. Duey Stroebel notes: “Wisconsin’s public university tuition has been frozen for four years. Current UW-Madison seniors have never seen tuition or fee increases. The tuition freeze resulted in nearly $5,500 in savings over four years for a UW-Madison senior. Today, a semester at Madison costs $5,208. Under the past trend of annual 5% tuition increases, tuition would be $6,330 per semester or more.”

    Media Trackers responds “Meanwhile, all Democrats in Wisconsin are proposing is a plan to refinance students loan debt. They have opposed Republican tuition freezes and they have not introduced a plan to reduce the actual cost of higher education.

  15. wisconsin conservative digest says:

    Left has screwed the students for years in favor of the votes and money from The Left at the UW systems.
    They do the same with K12.

  16. Vincent Hanna says:

    Oh well if Duey Stroebel and Media Trackers say it, it must be true. Far right-wing sources are never wrong.

  17. Tim says:

    WCD, why isn’t Walker & republicans taking your advice to get tuition down to “$210/ years”.

    They have the votes, why don’t they act?

  18. AG says:

    VH, you’re right, you didn’t jump on the blame Walker train. I’ve just been seeing it so much here lately that I basically just expect it.

    Back to the options to offer debt holders an inexpensive financing vehicle to refinance student debt… I’m all about that. How do we make it happen?

  19. Vincent Hanna says:

    Yeah in these times of partisan divide I understand that “blame _____________” is par for the course.

    Aren’t some lawmakers calling for exactly that AG? I thought I heard that on WUWM yesterday but I could be mistaken.

  20. Jake says:

    It’s obviously Obama’s fault, nothing us ever Walkers fault.

  21. wisconsin conservative digest says:

    How could Walker possibly be blamed!! HE IS THE ONLY ONE THAT HAS DONE ANYTHING

  22. Tim says:

    WCD, throwing a pail of water on a house fire is “doing something”. He has the votes to make any changes in the UW system that his mind can conjure and the best he has is a tuition freeze?

    You always talk about how admin costs are too high, what has Walker and WI republicans done to fix that?

  23. wisconsin conservative digest says:

    You are right, Scott had to fix the Doyle/ Left, mess first, then run three elections campaigns plus a dozen other messes that Doyle left.
    Bit you are right we need a bipartisan effort to fix the system, even Ray Cross thinks that.

  24. Vincent Hanna says:

    When will you stop blaming Doyle? Walker has been governor for 5 years. What’s he done about it? Maybe too much focus on divisive issues and not enough on ones like this? Or is that Doyle and Obama’s fault too?

  25. BThave you gone s says:

    I’m no defender of the mega-banks and mega-Wall Street and if anyone believed Hillarys shrill screech about not being owned by them, well then to be fair you need to let everyone off the hook, but what’s the most insane part is how the school’s admins often are the ones who hep organize and rile up the students, when THEY control every line of their own budgets. (obviously!) My days at UWM saw an orgy of waste, while the banks deserve some blame for some tactics, the admins are Y FAR #1 culprits and always get away scot free!

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