In 2019, the student debt crisis only continues to grow. Americans now owe over $1.5 trillion in student loan debt, which averages to about $37,000 per student across 44.7 million people – that's 1 in 4 American adults. By comparison, in 2018, Americans owed $840 billion in credit card debt and $1.2 trillion in auto loans. Currently, only mortgage debt tops student loans. (Source)

Of that student debt, 81% is owed to the federal government, with the remaining 19% owed to private banks. Historically, federal loans were easier for students to get, with relatively reasonable interest rates. However, in recent years, more competition among private lenders has led to more options and better customer service, with many students even finding that they can get better deals by refinancing federal loans with private lenders.

Student loan payments have increased over two and a half times faster than the rate of inflation, creating financial stress for borrowers – 41% of student loan borrowers are unable to afford a $400 emergency. Student loans now have the highest rates of delinquency, topping both credit cards and auto loans, with 11.5% of student loans more than 90 days past due. Student loan debt is the only kind of household debt that continued to rise through the Great Recession. According to the Federal Reserve, millennials are now less likely to buy homes than young people were in 2005. (Source)

Despite the cost, young Americans continue to choose higher education and are more likely to prioritize going to college than previous generations. Wisconsin is no exception, and currently ranks sixth in the nation for number of college students graduating with debt. A total $24 billion of the student debt crisis burdens 900,000 Wisconsin residents. (Source) Family paychecks being constantly consumed by debt is a huge drain on the already struggling Wisconsin economy and prevents individuals from spending money locally on new homes, cars, and community businesses. The average length of time it takes for Wisconsin borrowers to pay back their student loan debt is estimated at 20 years. (Source)

Unfortunately for Wisconsin, some issues related to student loans can only be dealt with at the federal level. But not all hope is lost; Wisconsin could innovate solutions to provide some relief to students as other states have. In 2017, New York became the first state to offer free in-state tuition at public four-year universities to residents with household incomes of less than $100,000; in Rhode Island and Oregon, community colleges have been made tuition-free for residents, regardless of income. Other states are following suit by offering two years of tuition-free community college.* However, not all student debt solutions must come from the government – some private companies have begun to offer student loan reimbursement as a perk of employment. Refinancing loans with private lenders to get better interest rates has also worked for some borrowers.

While Wisconsin Democrats have been attempting to push through legislation surrounding refinancing through state-run authorities, Republicans in the legislature would rather see it handled by private institutions. At least 12 states currently operate student loan refinancing programs. It remains to be seen how Wisconsin will handle its portion of the student debt crisis, and the role private institutions will play in the future of refinancing student loans. (Source)