Yesterday, Wisconsin Governor Tony Evers established a task force on student debt. It will be led by Kathy Blumenfeld, Wisconsin’s Secretary of the Department of Financial Institutions, and will evaluate current debt policies, recommend solutions, improve financial literacy education, and protect consumers.
According to Governor Evers, the average debt of Wisconsin students is over $30,000. This, he says, presents a long-term problem for the state as a whole.
“We know that education-related debt disproportionately affects students of color, low income students, first-generation college students, women and veterans,” Evers says. “Not only that, but it impacts families, as parents take on more debt to help their kids to get a good quality of life, it becomes a multi-generational thing. Preventing kids from buying cars and homes, starting businesses, saving for retirement and starting a family. And that is ultimately holding back our state and our economy.”
A study by the United States Federal Reserve estimated that 400,000 people nationwide would have bought a home if it weren’t for their student loan debt.
That’s fewer than 10,000 people per state, but problems with student loan debt go beyond home ownership, especially if debtors miss payments. Marisha Harris, a woman from Milwaukee, missed two $25 payments while getting a divorce and was forced to pay $1,000 a month. She says this put her in a very difficult situation.
“I did have to make some very difficult decisions over the last few years,” says Harris. “I had to choose between whether or not I would keep my car or surrender it or move from my home. And my car is required for me to stay gainfully employed. And so I made the decision to move. With my children.”
Harris told the crowd that she would be paying off her debts this Friday.
According to a report from the Institution of College Access and Success, a nonprofit working to make college more affordable, 64% of Wisconsin students have debt. That’s about 189,000 students in the state.
But, according to an analysis from the nonpartisan think tank Brookings Institute graduate students owe half of the total outstanding student loan debt.
The other half was split among undergraduates, a much larger group.
Brittney Dempsee, a financial support coordinator at Madison Area Technical College — which lacks a graduate studies program — says the average debt there is $5000. But she has seen students with debt greater than $50,000, which she believes could have been prevented.
“We have to offer the full amount of loans that a student could use due to federal regulations,” says Dempsee. “So have to still offer the max amount even though it usually doesn’t need to be the max amount that they borrow since we are less expensive. Sometimes it’s not really fair where we don’t really have the opportunity to regulate the loan debt that students borrow.”
The limit for federal student loans is $31,000 for students who are dependents, or listed on someone else’s tax return, and $57,500 for people who aren’t dependents.
But, most private student loans are capped at anywhere between $75,000 and $120,000 for undergrads, with higher limits for graduate students.
But Madison Area Technical College is one of the cheapest options in Wisconsin, and its annual cost to attend is less than half of UW-Madison’s.
UW-Madison reported that the average student loan debt among people graduating from UW-Madison with a bachelor’s degree was over $28,000 in 2016, but the school says it is taking steps to address this.
Two year ago, UW-Madison announced that it would provide four years of tuition-free education to students from families making less than $56,000.
For the 2020-2021 school year, the limit will be $60,000. That February, UW Chancellor Rebecca Blank said some people from low-income families did not apply to UW-Madison because they believed it was out of reach financially.
UW-Madison reported that, in 2018, the program helped almost 800 students from 65 Wisconsin counties.