Three legislators announced they will introduce legislation that would refinance student loan debt. Wisconsin currently ranks sixteenth nationally for average student loan debt ($26,238) and tenth nationally for percent of graduates with student loan debt (67%). UW-Madison average student loan debt in 2011 was $24,000, with 48% of graduates having student loan debt.
The proposed legislation, announced Wednesday by Representative Cory Mason (D-Racine), Senator Dave Hansen (D-Green Bay), and Senator Chris Larson (D-Milwaukee), would create a state-run authority to refinance student loans through bond sales and a tax deduction for those paying off student loans.
Similar to existing home loan programs run by the Wisconsin Housing and Economic Development Agency, the state-financed loan rate could be as low as 4 percent, resulting in savings of about $500 per year for the average UW System graduate who has $27,000 in student loan debt.
The plan would also allow borrowers to deduct student loan payments from their income tax. The Fiscal Bureau estimates more than $500 annual savings for individuals and $1,000 for a married couple.
The legislators are hoping for bipartisan support for the bill, which will be introduced next week.