A University of Wisconsin center focused on advancing postsecondary education and addressing issues with it at UW held a forum looking at student debt and the issue of Income-Based Repayment ideas Thursday.

Speakers at the forum put on by the Wisconsin Center for the Advancement of Postsecondary Education sought to explain why students are graduating with so much debt and why they are defaulting on their debt.

“It isn’t just amount of debt one has, but about navigating the financial realities of life. People are unrealistic about how much money they have and what they can spend,” Tim St. Louis, of the Department of Educational Leadership and Policy Analysis said.

In Income Related Repayment, plans are set in place to assist students in avoiding loan default, smoothing consumption and managing payments. Existing IRR programs today are Income-Based Repayment, Income-Contingent Repayment and Pay As You Earn, an educational handout from the forum said. These plans are similar but have minor differences in the details that are often confusing to loan users, leaving students questioning what plan works best with their personal circumstance, the handout said.

While student loan users today are under repayment plans, similar to that of a mortgage, after college, U.S. Representative for Wisconsin’s 6th congressional district Tom Petri proposed the ExCEL Act which would simplify and improve student loans for borrowers, encourage responsible borrowing and save significant taxpayer dollars.

“Instead of the mortgage-like payment for student loans, which is what we have now, you would pay a percentage of your income, after college, over 150 percent of the poverty level,” Tom Petri said about the ExCEL Act, which has been introduced on a bi-partisan basis and has some interest in the Senate.

Petri said his goal is to make sure everyone has an opportunity, regardless of his or her background, to education and he hopes to achieve this via his new proposal.

Although the U.S. has used IRR programs for decades, very little can be said about the effects it has on the policy goals, the handout said.

The U.S. Department of Education has never evaluated the programs in place, but Jake Gross, an assistant professor in the College of Education and Human Development at University of Louisville discussed a framework to evaluate IRR models.

The concepts of effectiveness, efficiency and equity are the framework for evaluation that will be of aid to students looking to receive loans, and to researchers and policymakers who are making them, Gross said.

Students considering loans need to consider the effectiveness that a specific loan will exert on them, the efficiency of the loan and the equity that the loan gives to their personal circumstance, Gross said. It is crucial that students across the country become literate in language of loan policy before accepting loans in order to avoid loan default, he said.

Possible solutions to help decrease student loan defaults are being discussed but helping them manage the situation is what we need, St. Louis said.