Democrats push 'Higher Ed, Lower Debt' bill at hearing
A Wisconsin Senate panel listened to public testimony Wednesday on a Democrat-backed bill that would give the state the authority to refinance federal student loans at lower interest rates.
A public hearing on Senate Bill 194 was held in the state Capitol before the Senate Committee on Universities and Technical Colleges.
The legislation is authored by State Sen. Dave Hansen, D-Green Bay, and State Rep. Cory Mason, D-Racine. It's co-sponsored by all of the Democrats in the Senate and Assembly.
The measure known as the "Higher Education, Lower Debt" bill would create a state authority to help borrowers refinance their student loans; allow borrowers to deduct student loan payments on their state income taxes; and require borrowers to receive counseling about student loan debt prior to taking out loans.
A similar version of the bill last session was also given a public hearing, but it did not pass in the Assembly. Republicans have stronger majorities in both houses this session.
Nearly 40 million Americans hold more than $1.2 trillion in student loan debt, according to data from the U.S. Department of Education.
In Wisconsin, more than 800,000 people carry student loan debt, owing an average of $22,433. Total student debt in Wisconsin is more than $19 billion.
The amount of debt can be staggering.
"Just over $100,000 of student loan debt," Jenni Dye of Madison told the committee about her debt after attending law school.
Studies also show that higher amounts of student debt are impacting how much people spend on cars and their ability to afford a house.
Several current UW-Madison students testified in support of the bill, like junior Briana Schwabenbauer.
"The federal aid I was taking out is at an 8 percent interest rate," said Schwabenbauer. "And so can you imagine the amount of money our federal government is making off of me going to school and receiving an education."
John Reinemann of the Wisconsin Higher Educational Aids Board,said the proposal may have good intentions, but the changes could create a false sense of security for new students.
"There is some concern that if this mechanism did exist, it might perversely foster a certain disinterest in the actual consequences of borrowing this much money," said Reinemann.
The Republican leader of the Senate committee shared concerns during the hearing.
"How can we be assured that if this were to be enacted that we would actually see a lower interest rate?" And it's one of the things that I think when you are borrowing, it's important to know what that interest rate is," said State Sen. Sheila Harsdorf, R-River Falls.
During past debates, majority Republicans have said they could consider parts of this proposal, including some new tax deductions.
Next for the bill could be a committee vote to either advance or reject the measure. That has not been scheduled.
Republicans have a 3-2 majority on the panel and a 19-14 advantage in the full Senate.
Fiscal estimates show the state would lose $108 million a year if student loan payments could be deducted from state income taxes.
An average Wisconsin student loan borrower would see $179 in tax savings, and people with higher student loan payments would see as much as $531 in yearly tax savings.