RACINE — State Rep. Cory Mason’s bill aiming to ease student-loan struggles got a hearing Monday in the state Assembly, though it faces an uncertain future.
Mason’s proposal, called the “Higher Ed, Lower Debt” bill, takes a crack at the mountain of student debt many people face by allowing them to refinance their student loans, just as they can any other loan. They would do that through a new creation: the Wisconsin Student Loan Refinancing Authority.
The bill also extends a tax break for residents shouldering student loan debt. People in college are eligible for a deduction up to $6,943 for their tuition; Mason’s proposal would allow that deduction to continue years after college to help with student loan debt.
Legislators heard hours of compelling testimony today and last week in a state Senate hearing from people with a large amount of debt who want to pay back their loans at lower rates, said Mason, D-Racine.
He was encouraged that Republicans, who control both chambers of the Legislature, allowed hearings. But the real test will be whether they schedule a vote, Mason said.
That hasn’t yet been determined. Speaker Robin Vos’ office is reviewing testimony from the hearings, Vos’ spokeswoman Kit Beyer said. It’s not certain whether the Committee on Universities and Colleges, which held the hearings, will vote on the bill.
Mason, who co-authored the bill with state Sen. Dave Hansen, D-Green Bay, said he tried to write the bill in a way that would appeal to Republicans, noting its free-market approach and tax deductions. In private conversations, several Republicans have spoken highly of it, Mason said.
He added that he’s open to tweaks. Concerns arose in the hearings over using the Student Loan Refinancing Authority for financing and whether it could effectively implement the law.
The Student Loan Refinancing Authority would be modeled after the Wisconsin Housing and Economic Development Authority, which uses the state’s bonding authority to provide loans for housing and business projects.
Mason said he’s “excited to have conversations on how to fix the bill” because student loans are a dire concern for many families. His bill could save residents as much as $531 each year, according to the nonpartisan Legislative Fiscal Bureau.
“If letting them refinance can reduce their monthly payments by 10 percent, 20 percent, and deducting some of it can reduce that cost 10 percent, 20 percent, than you’ve made it more manageable for people,” he told The Journal Times’ Editorial Board last month. “You’ve put people in a place where maybe they can afford to buy that new home instead of continuing to rent, or buy a new car instead of a used car.”
The bill tackles a huge problem, with student loans now the second-largest debt behind mortgages, Mason said. The average student loan debt in Wisconsin is about $27,000, he said, and it can haunt people for decades. Even with a monthly $400 payment, it takes an average of 19 years to pay off that debt after principle and interest, Mason said.
Mason fears that at some point the cost of the degree will outweigh its benefits. While the bill doesn’t solve every problem in higher education, it gets at a big one.
“It’s a big issue that confronts people,” he said, “not just for a few years after they graduate college, but for a long time.”
About the bill
$531: maximum savings for student loan holders under “Higher Ed, Lower Debt” bill
$6,943: maximum tax deduction for student-debt holders under bill
Source: Legislative Fiscal Bureau