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 only open to students and alumni of the University of Wisconsin System.Well that sounds great on the surface, as having more places available to refinance student loans and lessen payments and interest rates is a good outcome, and if we can take steps toward that, then I’ll take it.
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. Walker has opposed the idea, and it has gone nowhere in a Legislature controlled by Republicans.
There's also a new website that borrowers can check out, and the “Look Forward to Your Future” site does seem to be a decent resource. It has a lot of good links and bits of information to help clear up some questions for borrowers, and so that can help assist Wisconsinites in making better choices that fit their situation.
But you’ll notice that these are links to pre-existing programs and options, and the website doesn’t improve anything, other than possibly increasing the flow of information. And when you look at Gov Walker’s press release announcing the new higher ed website and expanded eligibility at UW Credit Union, you’ll see that there isn’t really much changing in the banking industry in the state either.
Governor Walker also noted that the new website includes a list of 13 Wisconsin banks and credit unions that currently refinance student debt.It’s a good thing that UW Credit Union is opening its doors to more Wisconsinites (our home loan is through there, and they’ve treated us well), but that’s the only difference I see today vs yesterday. In fact, a cynical observer might say that this event was a PR move to drive more business to the state’s financial institutions, and lead to a nice campaign kickback or two to Walker and/or pro-WisGOP campaign organizations. Diverting the loans to the private banks also keeps elected officials from being directly responsible for correcting with any abuses of customers that might happen, as they would if a government agency were the ones getting the student loan payments and interest.
“There are private-sector solutions available for people who have student loans and who would benefit from being able to refinance that debt at a lower rate,’” Governor Walker said.
To provide additional Wisconsin residents with access to more options to manage educational expenses, the UW Credit Union Board of Directors recently approved a change in membership eligibility. Now, in addition to UW System past or present students, any Wisconsin resident who is currently enrolled or has attended any accredited institution of higher education can do business with the UW Credit Union. The Office of Credit Unions at DFI certified this change on September 8, 2016.
By the way, do we know the credit unions and other banks would take on those student loans? I don’t see any requirements for those banks to do so under Walker’s press release or today’s news reports. What if those banks decide the individual is just too much of a credit risk, either because of other debt or a lack of credit history? Then does it become “too bad, so sad” (especially under a deregulation-favoring WisGOP administration?), and those borrowers stay locked into the current system instead of having the options available under the Dems’ “Higher Ed, Lower Debt” plan? In addition, does the increased amount of funds out on loans at Wisconsin banks now mean that the rates for all other loans would have to be raised to lower the overall risk to the bank?
The other thing to note is that Walker felt like he had to hold this event in the first place, which tells you that student loan debt is becoming a legitimate political issue, and that Republicans are losing on the issue because they’re seen as not caring by not wanting to make changes. So this is a classic “photo op over policy” move designed to defuse the issue ahead of November’s elections. I see this as desperation and more proof that the GOP is out of new ideas when it comes to dealing with the real problems that afflict Gen Xers and Millenials that are trying to keep afloat in Fitzwalkerstan.
Scot Ross, who is the executive director of One Wisconsin Now and someone who has made student loan debt a personal crusade, summed up the Walker student loan plan quite well.
“Nearly one million Wisconsin student loan borrowers have over $19 billion in debt and the best Gov. Walker can manage is to hold a press conference announcing he is doing nothing and they should go talk to a bank or visit a website.I agree it's not enough. Gov Walker’s plan merely changes the place where student debtors make their payments, and that doesn’t work in a system that is leaving far too many behind the 8-ball, and in need of larger reforms. If I were the Dems, I’d keep demanding that there be a “public option” that’s necessary to improve the bottom line for tens of thousands of consumers whose financial activity is being limited under the current student loan repayment system.