A pair of Democratic lawmakers is reintroducing for the third time a proposal that would allow student loans to be refinanced at lower interest rates, but the bill is unlikely to gain traction in Wisconsin's Republican-led Legislature.
The bill, authored by Sen. Dave Hansen, D-Green Bay, and Rep. Cory Mason, D-Racine, would create a Wisconsin Student Loan Refinancing Authority, modeled after the Wisconsin Housing and Economic Development Authority.
The authority would be charged with creating a system to buy federal and private loans and refinance them at lower rates. Under the bill, borrowers would also be able to deduct student loan payments from their income taxes.
Hansen and Mason said at a news conference on Tuesday their bill offers real solutions for student loan borrowers in Wisconsin, while Gov. Scott Walker's offers to help have been a "mirage."
"We’re not asking for any kind of handout. It’s simply a request to have the fair opportunity to refinance our loans," said Madison Ald. Mo Cheeks, who said he and his wife pay more per month on their student loans than they do on their mortgage.
Walker panned the Democratic proposal last month, speaking at the Wisconsin Credit Unions Lobby Day in Madison.
Walker said the proposal would amount to creating "another government bureaucracy," and argued financial institutions like credit unions are better tasked with refinancing than a state authority would be.
"I think it makes a much more compelling case if our state’s financial institutions can be the ones people turn to as opposed to putting pressure on the state government to create something that really is not our business or our mission," Walker said.
The governor has touted an announcement made last fall that he says will give more student loan borrowers the opportunity to refinance their loans. UW Credit Union announced in September it would expand its membership eligibility to include any current or former college students who currently live in Wisconsin.
The credit union has offered refinancing and consolidation to its members for about three years, but previously, membership was available to past and current University of Wisconsin System students.
Mason said that program might be helpful for a borrower with assets, but wouldn't likely offer much help to a young person who doesn't own a house or have established credit.
"If the banks were going to solve the problem, I think they would have already solved it," said Scot Ross, executive director of the liberal group One Wisconsin Now.
Wisconsin in 2016 had the fifth-highest percentage in the nation of graduates with student debt, at 70 percent, according to the Institute for College Access and Success. The average debt for someone with a bachelor's degree was about $29,000.
Walker on Tuesday announced plans to cut tuition by 5 percent for in-state undergraduate students at University of Wisconsin System schools.