Imagine you are 18 years old. You have been accepted to your first-choice college and are moving out of your parents’ house to live on your own for the first time. You know you need money to pay for tuition, room and board, but you don’t know exactly how much. You visit a student loan officer, who tells you that you qualify for the maximum amount. Elated, you accept.
Ten years later, you realize that you took out far too much money, which you now must repay with interest. You are making minimum payments on your student loan debt and are delaying buying a house and starting a family because you simply cannot afford it.
This is a story I hear far too often from young Wisconsinites.
I feel that there are too many Americans of all ages saddling themselves with unsustainable amounts of debt. So, it is not surprising that 18-year-old first-time borrowers are doing this as well. Even when I went to college 40 years ago, some of my classmates took out more debt than in necessary for tuition, room and board.
The current student loan debt in the United States is over $1.6 trillion. This number has more than doubled in the last decade and continues to grow at an excessive rate. The massive amount of borrowing is affecting young people’s ability to have a family, buy a car and own a home. Only 32 percent of young college graduates (25-39) with student loan debt say they are living comfortably, compared to 51 percent of college graduates without outstanding loans. With this crippling student loan crisis, we must find ways to ensure students are not borrowing more than they need.
That is why I introduced the Responsible Borrowing Act, will enable experienced professionals at institutions of higher education to look out for the best interest of their students by setting the amount of money they can, and should, borrow. A vital part of the college experience is developing financial literacy and learning to live on your own. This bill will help teach students the importance of responsible borrowing and planning for the future, while protecting them from learning this lesson the hard way.
Some people take decades to repay their loans and agonize over how much money they borrowed. Some realize that they are putting their life on hold because so much of their paycheck goes to their lender. Some cut costs, get a second job and go through the headache of restructuring their loan. The Responsible Borrowing Act will help solve these problems before they start by giving students, who are often first-time loan applicants, some much-needed guard rails from their school.
