UNDATED (WSAU) -- The amount of debt students leave college with is staggering, and some state and national lawmakers are working on ways to help students and their families.
At the federal level, U.S. Senator Tammy Baldwin says there is an “urgent need to pass legislation to help ease the crushing burden of student loan debt that is holding back this generation and creating a drag on economic growth for our country.” She questioned witnesses at a Senate Budget Committee hearing Wednesday that focused on student debt and the impact it has on the economy. Baldwin supports new legislation to allow borrowers with federal and private undergraduate loans at high interest rates to refinance at today’s lower 3.86 percent interest rates with no refinancing fees. If passed, students with an average outstanding debt load of $30,000 paying a 6.8 percent interest rate would save about $5,000 by refinancing to today’s lower rate.
At the state level, Democrats including Stevens Point Representative Katrina Shankland will reintroduce legislation that failed to get a floor vote in the last session. It’s called the Higher Ed-Lower Debt bill. She says the state bill would also offer lower interest rate refinancing, and more. “It would give them a tax break, basically saying if you’re investing in yourself and your education, and contributing to the workforce in the future by being an educated worker, you deserve a small tax break, so what it would do is it would allow students to deduct their student loan payments off of their taxes, so that would help them a lot on their Wisconsin state income tax.”
Shankland says every little bit we can put back into the pockets of college graduates new to the workforce is money they will spend elsewhere, helping the economy. Right now, she says the debt burden is preventing these educated workers from putting more money back in the economy. “I think if you graduate with $28,000 in debt, you’re going to be spending at least a decade if not more than that paying that off instead of investing in the economy." She adds, "You’d still have to pay it back but you would have a lower interest rate, saving thousands.”
The federal bill has been introduced and is making its way through Washington. The state proposal will have to wait until the new Legislative session begins.
Nearly 40 million Americans have outstanding student loans. New data recently released by the Federal Reserve shows that student loan debt grew by $31 billion from January to March of this year, now totaling $1.2 trillion dollars. Shankland says that’s more that America’s total credit card debt.