% >> IT'S NOT WITHOUT CONTROVERSY,
% BUT THIS WEEK BY EXECUTIVE ORDER
% THE U.S. DEPARTMENT OF EDUCATION
% WILL WIPE AWAY HUNDREDS OF
% BILLIONS OF DOLLARS OF STUDENT
% LOAN DEBT FOR SOME 47 MILLION
% BORROWERS.%UP TO $20,000 OF D
EBT
% CANCELLATION WILL BE GIVEN TO
% PELL GRANT RECIPIENTS, THOSE ARE
% GRANTS GIVEN TO THOSE WITH
% EXCEPTIONAL FINANCIAL NEED.
% UP TO $10,000 OF FEDERAL STUDENT
% LOANS WILL BE FORGIVEN FOR OTHER
% BORROWERS.
% ONLY THOSE EARNING $125,000 OR
% LESS ARE ELIGIBLE.
% ADDITIONALLY, THE PAUSE ON
% FEDERAL STUDENT LOAN REPAYMENT
% REMAINS IN PLACE UNTIL THE END
% OF THIS YEAR.
% ANOTHER PRONG OF THE ORDER CAPS
% MONTHLY PAYMENTS FOR
% UNDERGRADUATE LOANS AT 5% OF A
% BORROWERS INCOME.
% IN WISCONSIN, ACCORDING TO THE
% U.S. DEPARTMENT OF EDUCATION,
% MORE THAN 687,000 STUDENT LOAN
% BORROWERS OWE MORE THAN
% $21.4 BILLION.
% WITH AN AVERAGE STUDENT LOAN
% BALANCE OF JUST MORE THAN
% $31,000.%TO UNDERSTAND THE IM
PACT, WE GO
% TO NICK HILLMAN, PROFESSOR AT
% THE UW-MADISON SCHOOL OF
% EDUCATION AND DIRECTOR OF THE
% APPLIED RESEARCH LAB.
% THANKS VERY MUCH FOR BEING HERE.
% >> MY PLEASURE, THANK YOU FOR
% THE INVITATION.
% >> CONTROVERSY COMES FOR THOSE
% WHO THINK IT'S TOO BIG A GIVE
% AWAY AND THOSE WHO THINK IT'S
% TOO LITTLE.
% AS AN EXPERT IN THE AREA, WHAT'S
% YOUR REACTION TO THE STUDENT
% LOAN ORDER?
% >> THAT'S RIGHT.
% POLITICS OF THIS, SO THE
% AGREEMENT OF WHETHER IT'S TOO
% BIG OR TOO SMALL CUTS ACROSS
% REPUBLICANS AND DEMOCRATS, WHERE
% TYPICALLY REPUBLICANS ARE SAYING
% IT'S TOO BIG, SHOULDN'T BE DOING
% THIS AT ALL, EVEN IN THE
% DEMOCRATIC PARTY, BIDEN'S OWN
% PARTY THERE IS DISAGREEMENT ON
% WHETHER IT WAS BIG ENOUGH OR
% SMALL ENOUGH.
% AND SO CERTAINLY THAT IS DEBATED
% RIGHT NOW AND I THINK THE
% RESEARCH EVIDENCE SAYS $10,000
% IN CANCELLATION CAN DO A LOT OF
% GOOD FOR A LOT OF BORROWERS.
% >> SO YOU THINK THAT THIS COULD
% HELP WISCONSIN BORROWERS?
% >> YES, AND TWO REASONS.
% ONE IS THAT A LOT OF TIMES THE
% BORROWERS WHO HAVE SMALL LOANS,
% THEY HAVE SMALL LOANS BECAUSE
% THEY ONLY ENROLLED IN SCHOOL A
% LITTLE WHILE AND LEFT WITHOUT A
% DEGREE, AND STRUGGLE BECAUSE
% THEY NOW DON'T HAVE A DEGREE TO
% PAY OFF IN THE LABOR MARKET AND
% DEBTS ARE OFTEN LESS THAN
% $10,000, AND SO THAT COULD HAVE
% A DIRECT IMPACT FOR A LOT OF
% STRUGGLING BORROWERS WITH
% RELATIVELY SMALL LOANS AND A LOT
% OF BORROWERS WITH THAT SIZE
% DEBT, $10,000 THRESHOLD HAS A
% COUPLE DIFFERENT REASONS TO HAVE
% BEEN CHOSEN.
% >> THE WORST CASE OF THAT,
% THOUGH, IS A BORROWER WHO HAS
% JUST A WHOLE LOT OF DEBT AND
% DIDN'T GET THAT DEGREE.
% >> THAT'S RIGHT.
% THAT'S RIGHT.
% AND THAT'S A BIG PROBLEM THAT
% THIS CANCELLATION CAN HELP A
% LITTLE BIT BUT DOES NOT
% NECESSARILY PREVENT FROM
% HAPPENING IN THE FUTURE.
% >> HOW IS THE STUDENT LOAN DEBT
% LOAN BALLOONED OVER THE DECADES?
% >> PROBABLY TWO BIG FACTORS
% CONTRIBUTE AND THEY WORK
% TOGETHER.
% ONE IS THAT TUITION HAS RISEN,
% BUT IT'S NOT JUST TUITION, IT'S
% THE TUITION, THE FEES, THE ROOM
% AND BOARD, ALL THE OTHER
% EXPENSES THAT IT TAKES TO STAY
% IN COLLEGE HAVE BEEN RISING
% RAPIDLY.
% DOUBLING SINCE THE 1990S, EVEN
% ADJUSTED FOR INFLATION.
% THAT'S ONE SIDE.
% THE OTHER SIDE IS FAMILY INCOMES
% HAVE EITHER PLATEAUED OR
% DECLINED OR BARELY EVEN MOVED,
% AND THE INCOMES THAT WE HAVE
% JUST AREN'T KEEPING PACE WITH
% THE EXPENSES OF GOING TO COLLEGE
% AND AS A RESULT, MORE
% INDIVIDUALS ARE HAVING TO SHARE
% THAT RESPONSIBILITY OR CARRY
% THAT RESPONSIBILITY THEMSELVES
% THROUGH THE LOAN SYSTEM TO PAY
% FOR COLLEGE.
% >> IN YOUR MIND, IS THAT DEBT
% WORTH IT IN TERMS OF EDUCATIONAL
% OPPORTUNITY?
% >> IT IS WORTH IT ON AVERAGE.
% THERE ARE ALWAYS GOING TO BE
% SITUATIONS THAT JUST DON'T FIT
% THAT AVERAGE STORY, BUT ON
% AVERAGE, STRONG EVIDENCE THAT
% NOT ONLY FOR THE INDIVIDUAL DOES
% THE EDUCATION PAY OFF IN THE
% LABOR MARKET BUT FOR YOUR
% COMMUNITY, BETTER OFF WITH
% WELL-EDUCATED PLUMBERS OR %HE
ALTHCARE WORKERS OR YOU NAME
% IT.
% A NUMBER OF REASONS WHY THE
% PAY-OFF IS STILL THERE BUT THE
% VALUE PROPOSITION IS BEING
% QUESTIONED AND KIND OF TAPPING
% INTO THAT QUESTION RIGHT NOW.
% >> PEOPLE WE KNOW CAN TAKE
% DECADES TO PAY OFF SCHOOL LOANS.
% WHAT ROLE DO INTEREST PAYMENTS
% PLAY IN THE PAYMENT SCHEDULE.
% >> THEY MAKE IT MORE EXPENSIVE.
% TOOK OUT $10,000, IN SEVERAL
% YEARS MIGHT BE HIGHER THAN THAT,
% MIGHT OWE 12, 13,000, IF THE
% PAYMENTS ARE ONLY GOING TO
% INTEREST.%THE BIDEN ADMINIST
RATION IS ALSO
% PROPOSING TO CAP SOME OF THOSE
% INTEREST RATES ON, AND REPAYMENT
% PLANS AND THERE ARE SOME
% CONVERSATIONS AROUND HOW TO
% REMOVE SOME OF THOSE INTEREST
% RATES OR MAKE THEM LOWER, BUT
% THEY ARE STILL THERE, STILL PART
% OF THE NETWORK AND THE
% INFRASTRUCTURE OF OUR STUDENT
% LENDING SYSTEM.
% >> PART OF THE PLAN ALSO CUTS
% UNDERGRAD PAYMENTS TO 5% OF
% INCOME.
% HOW MEANINGFUL IS THAT FOR
% FOLKS?
% >> I THINK THAT SHOULD BE PRETTY
% MEANINGFUL.%THESE INCOME-DRI
VEN REPAYMENT
% PLANS, THEY ARE CALLED, AND MAY
% BE 7 OR 8 DIFFERENT ONES NOW AND
% BORROWERS ARE TAPPED INTO THEM,
% AND 5% OF DISCRETIONARY
% EARNINGS, BASICALLY THE INCOME
% YOU HAVE ABOVE THE POVERTY LINE,
% SO IT'S SUPPOSED TO BE A WAY TO
% JUST MAKE PAYMENTS, YOU KNOW,
% LESS BURDENSOME FOR INDIVIDUALS.
% >> WHAT KIND OF STUDENT GETS
% MOST HURT BY TAKING OUT BIG
% STUDENT LOANS?
% >> THAT'S A GREAT QUESTION.
% YOU KNOW, THERE ARE SO MANY
% DIFFERENT STORIES AND SO MANY
% DIFFERENT PROBLEMS THAT HAPPEN
% IN OUR LOAN SYSTEM.
% AND IN MANY CASES, THE DEBT
% CANNOT BE DISCHARGED IN
% BANKRUPTCY OR DIFFICULT TO
% NAVIGATE THE REPAYMENT SYSTEM
% ITSELF AND THE PROCESSES YOU CAN
% BE HARMED, ADMINISTRATIVE
% PROCESSES, COMPLEXITY OF THE
% LOAN SYSTEM.
% AND OTHER WAYS IT HELPS STUDENTS
% STAY ENROLLED IN SCHOOL.
% IT'S A DOUBLE-EDGED SWORD,
% WITHOUT LOANS PEOPLE MIGHT NOT
% HAVE GONE TO COLLEGE IN THE
% FIRST PLACE AND NOW YOU HAVE
% THEM AND IT'S A HARD, HARD
% PUBLIC POLICY PROBLEM TO SOLVE.
% >> IN YOUR MIND, SHOULD PAYING
% FOR COLLEGE BE REENVISIONED?
% >> I THINK IT WILL BE
% REENVISIONED.%I THINK THIS I
S A BIG MOMENT IN
% THAT REIMAGINATION, AND I THINK
% THAT OUR LOAN-BASED SYSTEM, IT
% ORIGINATED IN THE 1950S AND
% 1960S AND IT WAS REALLY DESIGNED
% TO MEET A VERY SMALL NEED AT THE
% TIME, AND OVER THE YEARS WE KIND
% OF ACCEPTED THAT MODEL AND HAVE
% USED THAT MODEL AS OUR CURRENT
% MODEL, AND I THINK IT'S BEING
% QUESTIONED ON WHETHER THAT WORKS
% TODAY.
% >> YEAH, INDEED.
% NICK HILLMAN, THANKS VERY MUCH.