More Wisconsin residents who borrowed money to pay for college will be able to refinance their student loan debt under expanded eligibility rules, UW Credit Union officials and Gov. Scott Walker said Tuesday.
State officials also rolled out a new website, lookforwardwi.gov, that gives students and parents information on how to plan for college, and points graduates toward UW Credit Union and a dozen other Wisconsin financial institutions that offer refinancing for student debt.
By touting the ability to refinance student loans at a lower interest rate, Walker embraced an issue that Democrats in Wisconsin and across the country have made a top priority as they have criticized the rising cost of attending college. But the measures Walker announced Tuesday are far more limited in scope than what Democrats have proposed, and critics said they will do little to help struggling borrowers.
UW Credit Union has for the past three years offered members the option to refinance student loans, President and CEO Paul Kundert said. But the credit union’s services were open only to students and alumni of the University of Wisconsin System.
Officials announced Tuesday that they have expanded eligibility to all Wisconsin residents who have attended an accredited college or university anywhere in the United States or abroad. State regulators approved the change earlier this month.
“This offers a tremendous opportunity for students, not only to get student loan financing, but particularly for those looking to consolidate or refinance that,” Walker said.
Democratic lawmakers have proposed a more dramatic change to address the issue — a state authority that would handle student loan refinancing — which they say would lower many borrowers’ monthly payments.
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Walker has opposed the idea, and it has gone nowhere in a Legislature controlled by Republicans.
Democrats point to data that show 70 percent of Wisconsin college students graduate with debt, the third-highest percentage of any state in the country, and that debt holders leave school owing $28,810 on average, according to the Project on Student Debt.
The legislators who authored the Democratic refinancing proposal, state Rep. Cory Mason, D-Racine, and Sen. Dave Hansen, D-Green Bay, were not impressed with Walker’s announcement on Tuesday. Hansen derided it as “election-year grandstanding.”
“It’s really a non-solution to a really big problem,” Mason said. “Lip service isn’t going to cut it, (Walker) is going to have to find a real solution.”
Walker criticized the Democratic legislation as “another layer of government,” and said refinancing through banks and credit unions is a solution based in the private sector.
UW Credit Union offers student loan debt refinancing at interest rates that vary from 4.04 to 8.54 percent, depending on the borrower’s credit score.
Like with any other loan, Kundert acknowledged the borrowers most likely to benefit from the service would be those with good credit, while graduates struggling with their student loan burden would be unlikely to see much improvement in their rates.