A bill that would have allowed students to refinance their loan interest rates was voted down in Assembly Thursday, following concerns about its effectiveness.
The “Higher Ed, Lower Debt” bill, introduced by Sen. Dave Hansen, D-Green Bay, and Rep. Cory Mason, D-Racine, aimed to give students financial support in the midst of a growing student debt crisis in Wisconsin and across the nation.
Republican legislators voiced their concerns with the mechanics of the bill, before it was voted down in the Assembly with a 60-38 vote, and an Associated Students of Madison representative also said there were questions about the bill’s effectiveness.
According to the U.S. Federal Reserve, there are 753,000 Wisconsin residents with federal student loan debt, not including private student loan debt.
The Institute for College Access and Success ranked Wisconsin eighth nationally for new graduates with debt, and 14th for average amount of loan debt.
Rep. Dave Murphy, R-Greenville, said the bill had good intentions but bad mechanics.
“This bill does not succeed at helping students and would not change anything,” Murphy said. “We have to go back to the drawing board.”
Democratic supporters argued the bill would have reduced interest rates for students across Wisconsin.
In a statement, Sen. Chris Larson, D-Milwaukee, said interest rates could be as low as 3.5 to 4 percent and would potentially save students hundreds of dollars a year.
In addition to lowering interest rates the bill intended to provide services to better educate students and parents about student loans, the best and worst private loan lenders and ensure that students receive loan counseling so every student can make an informed decision about student loans, Larson said.
However, Murphy said Republican estimates on the actual effectiveness of the bill were much lower than Democrat expectations. If the bill were passed it would only be able to lower rates to as low as 8 percent, he said.
Rep. Dana Wachs, D-Eau Claire, said in a statement that he was disappointed in the inaction on the bill.
“There is over a trillion dollars of student loan debt in this country, and this is the kind of debt that people cannot get out of,” Wachs said. “The Assembly Republicans talk about growing the economy, yet they won’t give our students a better chance to contribute to the economy when they graduate.”
Some members of ASM were active in trying to bolster support for the bill in legislature and had student leaders at the public hearings in both the Assembly and Senate, providing personal testaments to how student debt has affected their lives.
However, Morgan Rae, ASM Legislative Affairs chair, said she was not surprised the bill did not work out.
“There were a lot of general concerns with the bill and how effective it would be if it did pass,” Rae said. “We are happy though because this is a step in the right direction.”
A similar bill is being circulated and promoted on the federal level, which would be far more effective if enacted, Rae said.