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