Student-Loan Debt: A Problem that Affects a Million Wisconsinites

[james.hendrickson]

Student-Loan Debt: A Problem that Affects a Million Wisconsinites

February 6. 2017

About 43 million Americans are now carrying a total of more than $1.4 trillion in student loan debt. (zimmytws)

MADISON, Wis. -- Wisconsin now ranks among the top five states in the nation for percentage of college grads holding student loan debt, with the average Wisconsinite carrying around $30,000 in loans.

Student loan debt cannot be discharged in bankruptcy and is all but impossible to refinance as you can a mortgage or a car loan. A bill to change that in Wisconsin - 2015 SB 194, called the Higher Ed Lower Debt Act - has languished in the legislature for years while the problem has continued to grow.

Scot Ross, executive director of the public policy non-profit group One Wisconsin Now, said it's not just a problem that affects young people. He said 15 percent of student loan debt is held by people over age 50.

"And this statistic ought to scare everybody: in the year 2014, 155,000 seniors over the age of 60 had their Social Security payments garnished because of student loan debt,” Ross said.

The Higher Ed Lower Debt Act would create a state authority to help borrowers refinance their student loans at lower rates, and would give a tax break to those paying off student loans. Ross said he hopes the Act will get a fair hearing in this new legislative session.

The student loan debt crisis is a problem in every state, Ross said, and while Wisconsin has played a leadership role by at least proposing legislation to help ease the crisis, part of the problem is the federal government itself, which profits greatly from student loans.

"There was a study in 2013 that showed that the interest from student loan debt allowed the government to collect $51 billion,” Ross said. "And to put that in perspective, that year the most profitable corporation in America, Exxon-Mobil's profits were $46 billion."

Ross said there are nearly 1 million Wisconsinites who owe more than $19 billion in student loan debt. He said the Walker administration is making the problem worse, by cutting funding for higher education in record amounts.

Ross said a 2016 poll showed wide agreement that the Higher Ed Lower Debt Act should be passed.

"Bipartisan support at over 84 percent, so Republicans and Democrats both think this is a common sense solution,” he said. "For whatever reason Governor Walker and his Republican legislative leaders do not. I would think they'd join us in trying to come up with real solutions."

Tim Morrissey, Public News Service - WI

Republished with permission:

Source: http://www.publicnewsservice.org/201...nites/a56131-1

[SavingMum]

Wow. I'm sitting here stunned - I had no idea it was this bad! And that part about the seniors - in the UK, the loan is cleared after 30 years, regardless of how much you've repaid.

I'm now SUPER glad I managed to get my degree without going into debt (I paid under £500 in total )

I mentioned this to a friend who quoted one method of solving this problem:

Warren Buffet says "I could end the deficit in five minutes. You just pass a law that says that any time there's a deficit of more than three percent of GDP, all sitting members of Congress are ineligible for re-election. Yeah, yeah, now you've got the incentives in the right place, right?"

The interview where he said this is here: www [dot] cnbc [dot] com/id/43670783
for some reason I can't post links, even though I already have over 15 posts... no fair

[Smallsteps]

I am not surprised by older folks in debt it is a question of why?

Did they co-sign for a child/ grandchild or did they go to school later in life to change careers etc?
I worked in a retail situation where many in their 40s may have not gone to college and were SOLD on the idea that the answer was go back to school while it might have worked for some it did not for all if someone attended but did not finish they still owe money and the true cost and the fact that it cannot be wiped out in bankruptcy is really only explained after you graduate or quit.
Many I knew quit chose to ignore the debt cause they felt they did not get their moneys worth and the interest just piles on.... until someone decided to collect by all means possible.

The BIG question we should wonder about is why the education on personal finance is SO bad. If faced with the true cost before signing up a person can make better decisions.
Education is a SOLD commodity and advertised that way too... people want a big name education to impress someone I guess.
People are sold that it is an investment in yourself and will pay off... in the end true for some fields of study NOT true in many. Before sounding the alarm and wiping away all the mistakes some people make why not look at the root first. when I graduated I was forced to take an hour long tutorial on my student debt explaining the many rules my question is why not show that video/ class BEFORE enrollment ... the answer is simple because it would turn off some of the potential customers .. I mean students.

[rutgers07]

I am not surprised by older folks in debt it is a question of why?

Did they co-sign for a child/ grandchild or did they go to school later in life to change careers etc?
I worked in a retail situation where many in their 40s may have not gone to college and were SOLD on the idea that the answer was go back to school while it might have worked for some it did not for all if someone attended but did not finish they still owe money and the true cost and the fact that it cannot be wiped out in bankruptcy is really only explained after you graduate or quit.
Many I knew quit chose to ignore the debt cause they felt they did not get their moneys worth and the interest just piles on.... until someone decided to collect by all means possible.

I had many classmates in my matriculating Master's class that were well into their 40's, sometimes 50's. Small sample size but prior and subsequent matriculating classes have also had older folks enrolled.

[Thrif-t]

I think there's a percentage of people who just don't get personal finance and I'm not sure its anything they can grasp. A lot of times they don't understand the ramifications of loans and interest until they live it and face the consequences later.

I don't think 401k's are working for the greater good either. Sure they're great for people like us on this forum but for the vast number of people, not so great. I think we are going to have big problems down the road with a huge segment of the population due to their lack of funds.

Maybe companies need to have control over the 401k like pensions used to work. I guess if the companies don't put the money in for the employee then they just take the money out of the paycheck like they do now. Maybe it would help if people couldn't withdraw, stop contributing...but I guess I"m getting on a different tangent than this thread, sorry.

[Smallsteps]

I think there's a percentage of people who just don't get personal finance and I'm not sure its anything they can grasp. A lot of times they don't understand the ramifications of loans and interest until they live it and face the consequences later.

I don't think 401k's are working for the greater good either. Sure they're great for people like us on this forum but for the vast number of people, not so great. I think we are going to have big problems down the road with a huge segment of the population due to their lack of funds.

Maybe companies need to have control over the 401k like pensions used to work. I guess if the companies don't put the money in for the employee then they just take the money out of the paycheck like they do now. Maybe it would help if people couldn't withdraw, stop contributing...but I guess I"m getting on a different tangent than this thread, sorry.

I think you are totally on to the right track in both the student loan disaster lurking and the problem of so many staying away or avoiding 401k because they do not understand their options.

[disneysteve]

I had many classmates in my matriculating Master's class that were well into their 40's, sometimes 50's.

The average age of my first year class in med school was 27. At 21, I was one of the youngest in the class. Most people didn't go straight from college to med school. We had many 2nd career people in the class. The oldest student was 44 when we started. When you figure 4 years of med school followed by a minimum of 3 years for internship and residency, they would be at least 51 when they finished. Our student loans were on a 25-year repayment schedule so they could theoretically be paying until they were 76 or beyond if they stuck to the schedule.

You also have parents (like my wife and I) who take out PLUS loans to help finance their kids' college education. We're 52 and 53. I think those loans have a 10-year repayment so if we didn't accelerate payments, we'd be in our early 60s before they were paid off. We'll have them repaid in a couple of years so it's not an issue to us but I can easily see where some parents would still be paying when they were retirement age especially if they are older than us when their kids hit college.