Two Democratic lawmakers are reintroducing a bill that would make Wisconsin the first state to allow student loans to be refinanced at lower interest rates.
The bill would create a Wisconsin Student Loan Refinancing Authority, modeled after the Wisconsin Housing and Economic Development Authority. The authority would be charged with creating a system to buy federal and private loans and refinance them at a lower rate.
Rep. Cory Mason, D-Racine, said if the state can bond for millions of dollars to pursue economic development, it should be able to do the same to allow people to refinance their student loans.
Under the bill, borrowers would also be able to deduct student loan payments from their income taxes.
Mason and Sen. Dave Hansen, D-Green Bay, are once again spearheading the effort. A similar version of the bill introduced last session was given a public hearing, but failed to pass the Assembly.
A proposal modeled after the Democratic bill was voted down on a party-line vote in the Joint Finance Committee last week.
Republicans on the committee objected to the creation of a loan refinancing authority, but said there are some aspects of the proposal they might support as separate legislation.
Rep. Dean Knudson, R-Hudson, said he would like to see a portion calling for “enhanced counseling” related to college costs taken up separately. He also indicated GOP lawmakers would likely support the income tax deduction.
Hanson and Mason on Tuesday said they believe their proposal can earn bipartisan support, and they’re willing to work with their colleagues across the aisle to develop a version that can pass.
Since the bill was first introduced last session, the number of Wisconsinites with student loan debt has grown from 753,000 to 815,000, and the average debt for someone with a bachelor’s degree has increased from about $22,000 to $28,400. Total student debt carried by Wisconsin residents is a little more than $19 million, according to White House figures.
Briana Schwabenbauer, a University of Wisconsin-Madison student studying elementary education, said she expects to pay back $60,000 to the federal government and private lenders after she graduates.
Schwabenbauer said her parents did everything they’re supposed to do, setting aside money each month to help pay for her college education. But she still needed loans to earn her degree.
Mason and Hansen’s bill would “help us to escape the American nightmare that has been created by the continuous mountain of debt that our nation is facing,” Schwabenbauer said.
Schwabenbauer joined a UW-Madison medical student and a UW-Madison graduate student in social work in sharing their student debt stories.
“Social workers, doctors, teachers,” said Scot Ross, executive director of the liberal advocacy group One Wisconsin Now. “These are the anchors of our society … To deny them the opportunity of the American dream when they’re doing the yeoman’s work, the hard work of helping people … is a crime.”
Ross, Mason and Hansen said the bill could eventually be used to attract young businesses to Wisconsin, with the knowledge that employees would be able to refinance their loans.
They argued that the bill would have a positive long-term effect on the state’s economy, with money that would have been spent paying student loan interest instead being spent on things like new cars and home down payments.
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