State Treasurer Sarah Godlewski has held listening sessions statewide to hear concerns about the impact student loan debt is having on Wisconsin.
The topic is not only for students and parents.
“One of the most recent stories we heard is how this is affecting Baby Boomers, who are taking out money for their grandkids,” she said.
During a Jan.15 forum held by Godlewski and Rep. Don Vruwink, D-Milton, in Newville, audience members were invited to ask questions. Here are some of the questions they asked.
Can something be done about the affordability of college?
Godlewski: “I don’t have any authority over the board of regents, for example, or how they set they set tuition rates. I will say it is clear that the rate of inflation vs. the cost of school – the curve is just crazy. How much the state used to cover vs. what it does today does significantly impacts affordability. We are having conversations with the board of regents and I think that is the place to start.
"The other thing to look at is for-profit colleges. In Wisconsin we used to have a board oversee for-profit colleges to ensure they were diligent in accreditation and what they’re charging, how they set tuition rates. Over the last decade those regulations have been lessened. We’re looking at it as a consumer protection perspective, which sort of gets to college affordability."
Why has state funding decreased exponentially?
Godlewski: "Public universities are faced with: ‘We’re not getting as much money from the state so how do we do this? We either have to rely on alumni… or it has to ride on the backs of students and nobody wants that. How do we really address this affordability, knowing that the state has not stepped in in the way that it used to?' That’s a question that we need to be asking our legislators.”
Kari Heidenreich, chief of staff at the University of Wisconsin-Whitewater, lives in Milton and was in the audience.
Heidenreich: Going to the conversation of affordability and state funding, in 1975, UW-Whitewater received about 52% of their budget from the state. Right now we get about 10% of our budget from the state. We are in the seventh year of a tuition freeze. As my business colleagues would know, that’s not a very good business model. We’re starting to face some enrollment declines cause as we’ve seen basically in the nation, the birth rate has gone down. It’s not projected to get better. We’re looking at this in a wide array of things. As far as affordability, UW-Whitewater is the best value in the state of Wisconsin. We are the best value for tuition and also when you take into account your housing, dining, we include textbook rental. We are the best value in the state for that.”
Why are student loan interest rates so high?
Godlewski said her answer was based speculation: “Based on a report from the Consumer Financial Protection Bureau, less than 2 percent of community banks in Wisconsin offer refinancing opportunities. Refinancing and these interest rates are driven by a few large players in the marketplace. In addition to a lack of competition, I think it goes back to what sets those rates. If a young person is going for a loan, they probably don’t have collateral. They don’t have any assets, and the ones that do are well off and don’t need help. How can we empower more local banks, community banks and credit unions to offer refinancing? How can we look at this risk aspect when students don’t have collateral or assets to still be competitive? And then still use for example, potentially the interest market, right now they’re not using that as a barometer, so how we help maybe drive that?”
What are other states doing?
Godlewski said one area is consumer protection. She said states are stepping up to make sure lenders aren’t able to provide loans to students without full financial disclosure. She’s heard students who refinanced with a private institution say they didn’t know they no longer qualify for forgiveness.
Another area is establishing refinancing authorities, she said.
Godlewski: These are public entities that will use bonding to help basically come up with a more competitive rate to refinance.
The problem she’s hearing is that refinancing has not been available for students who really need it.
Godlewski concluded by saying one of her charges is to present the student loan conversation as an investment, not a liability.
“How can we invest in our future and I know that that is something all of us are working towards,” she said. “We look forward to continuing the conversation and coming up with pragmatic solutions.”