Wisconsin governor Scott Walker is coming under fire for his remarks during his recent State of the State speech, in which he outlined cooperative plans between the state administration and financial institutions in the state for refinancing student loans.
One opinion piece by Scot Ross, executive director for progressive advocacy group One Wisconsin Now, blasted Walker’s encouraging borrowers to contact banks and credit unions. Walker is “incredibly naïve or purposely disingenuous” on the issue of rising student loan debt, according to Ross, who points out that Wisconsin is one of the top five states with the highest percentage of college graduates with student loan debt—70 percent in 2015.
The question seems to focus on federal refinancing. Ross states that borrowers “ought to be able to refinance [their] student loan, just like…a mortgage or a car loan,” and looks to the state and federal governments to create that possibility for student borrowers with federal student loans.
In 2014, Senator Elizabeth Warren (D-MA) attempted to do just that by introducing a bill called the Bank on Students Emergency Loan Refinancing Act. S.2432, as it was called, would have amended the Higher Education Act of 1965 and allowed student borrowers to refinance their federal student loans at current interest rates. The bill died due to a failed cloture vote, meaning that a vote to end debate on the bill did not pass. In 2015, the bill’s provisions were resubmitted as S.793.
While the student loan crisis affects borrowers and families across the political spectrum, party lines often become battle lines. Democrats typically favor government regulation and funding of programs such as Senator Warren’s refinancing bill, free tuition programs, or even student loan forgiveness. Republicans tend to take the position that while something should be done about the student loan problem, it is not the government’s job to step in and fix it. Focusing more on a self-sufficiency model, Republicans often discuss the possibility of students working through college to help defray costs, getting more help from family, or in Gov. Walker’s case, advising them to work directly with banks and credit unions to help restructure their loans.
While the possibility for refinancing does not exist, Ross does not speak about the options that the federal government does offer to student borrowers. The Department of Education has a wide variety of options for repayment, all of which are offered with no extra fees—which is more than most third party loan servicers can say.
The landscape of higher education aid is also no longer limited to grants and student loans; ISAs, education IRAs, and many other options exist as well. While lawmakers fight over the government’s role in the student loan crisis, borrowers would do well to perform their own research, find out all the options available for both financing and later repayment, and understanding what’s out there—preferably before they ever choose a school.
Image Copyright Gage Skidmore.