Borrowers with an undergraduate degree are making an average payment of $350 per month for 18.7 years, according to a study by One Wisconsin Institute.
That is more than a car payment and easily a third to a quarter of what many people pay on their mortgages. And a big chunk of that $350 is interest.
The good news is that ever since the Great Recession, a light went on and people started to realize how much higher education costs and finally started seriously considering technical colleges as an option. Also, after six consecutive years of 5.5 percent increases and a controversial hidden surplus, finally the University of Wisconsin System did the right thing and froze tuition for this school year.
But more has to be done, and Rep. Cory Mason, D-Racine, is right to have proposed a bill that, in the very least, allows students to refinance their student loans.
Granted, 30-year home interest rates have gone up, but still you can get an interest rate at about 4.3 percent on a home loan. Yet millions of people are still stuck paying 7 percent or more on some of their student loan payments and currently there is no way out.
Under Mason’s proposal, Assembly Bill 498, the state would create an independent authority similar to the WEDA, the Wisconsin Economic Development Association, which would have bonding authority and implement a program to allow people to refinance student loans. The bill says to qualify an individual must satisfy eligibility requirements similar to those a private lender uses and says a loan issued under the program is not dischargeable in a bankruptcy proceeding, similar to other student loans.
We still have questions about this program and what criteria would be used to ensure the state is protected from a lot of bad debt. But the Legislature should spend time further evaluating Mason’s proposal.
Ultimately, it would be better if the federal government would change its laws and allow for refinancing at the federal level as U.S. Rep. Mark Pocan, D-Wis., has proposed. But we all know how Washington works, or doesn’t work, and in that case sometimes it is better for the state to move forward and help where it can.
In this case, there is no reason Wisconsinites should not be able to refinance loans. We would much rather see those same residents buying a new car or dining Downtown.