Hundreds of thousands of Wisconsinites will owe less in student loans following President Biden’s debt forgiveness plan announced this week.
Wisconsin’s student borrowers owe an average of about $32,000. Biden’s plan forgives $20,000 for Pell grant recipients and $10,000 for others. To be eligible, borrowers must have an income under $125,000.
There are plenty of critics of Biden’s massive debt cancellation, and it’s likely to face legal challenges.
Sarah Gordon Altiman
Growing up, Altiman, 44, heard that for Native Americans like herself, college would probably be free. Altiman is a member of the Red Cliff Band of Lake Superior Chippewa.
"It’s a big misnomer that a lot of people face as Native people, that we go to school for free," Altiman says. "Even my mom thought that. And it’s just not true at all."
Altiman tried to save money by taking classes at MATC before transferring to UWM and graduating in 2009. Still, she says her undergraduate studies put her $62,000 in debt.
She deferred payments because of her low income, and eventually went back to school for a master's degree and doctorate, which were mostly funded by scholarships. But with interest, she says her debt has grown to about $137,000.
"Sometimes when people are like, [complaining about] student loans — I’m like, 'You have no idea,'" Altiman says. "And they’re like, 'Oh my gosh, I owe 60,000,' and I’m like, 'Ha!'"
The debt is so significant that she says she was denied a home mortgage in 2017.
Altiman was happy to find out that as a Pell grant recipient, $20,000 of her debt will be forgiven under Biden’s plan.
As an educator who has worked for MPS, MATC and now UWM, she hopes to get the rest of her loans forgiven through the Public Service Loan Forgiveness program, which applies to non-profit and government workers. Under Biden, eligibility for the program has temporarily expanded.
"I have hope now, and I didn’t have hope before," she says.
Altiman says she's thought many times that she might be better off financially if she hadn't gone to college. But her studies have allowed her to do what she loves: working with K-12 educators to improve instruction around American Indian history and cultures.
"So it goes both ways. I've regretted it, but I'm also glad that I did it," she says.
UW-Madison School of Education professor Nick Hillman says Biden’s loan cancellation will be a drop in the bucket for some people, like Altiman. But for other Wisconsinites, it’ll be more impactful. He says the median student debt in Wisconsin is about $17,000.
"About 30% of borrowers in the state of Wisconsin have loans that are less than $10,000, so another way to think about is one in three Wisconsin student loan borrowers will have their federal student loans completely gone after this goes into effect," Hillman says.
Trevonna Sims
Sims, 28, says her debt will be cut in half. Sims graduated from UWM in 2021. After switching majors multiple times and taking longer to graduate, she says she has about $45,000 in debt.
"People said just go to school and things will fall in place, but that's not necessarily true when you get out of it," Sims says.
As a library employee, she says her loans are roughly equivalent to her annual salary. Under Biden's loan forgiveness plan, her $45,000 debt should be reduced to $25,000, since Sims received Pell grants.
"I was relieved," Sims says. "I was definitely we relieved."
Sims is going back to school for her master's in library science, and she says the debt cancellation makes her feel a little less worried about potentially taking out more loans.
"I feel better about taking the risk to advance in my career," she says.
Rick Banks
Banks, 31, who works for Milwaukee County Office of Equity and is a community activist, will have his debt cut by a third.
He recently earned his bachelors’ degree from UWM after dropping out in 2014.
Banks has about $57,000 in student debt. As a Pell grant recipient, he’ll qualify for $20,000 in forgiveness.
"I am extremely excited about it," he says. "It’s not as excited as I wanted to be, because it’s not going to impact me day-to-day right now, because it’s not going to forgive the entirety of my student loans. It’s just gonna shorten the time period in which I’ll be paying them."
Banks was hoping for total loan forgiveness, and he still wants Congress will take action to further help borrowers.
Banks has benefitted from the more than two-year-long pause on student loan repayment during the pandemic. He was able to buy a house during that time.
"Between savings from not having to pay student loans and the stimulus, I was able to make a down payment on a small property," he says.
Biden extended the payment pause for what he says is the final time to December 31, 2022.
Luz Sosa
Sosa, 38, has made progress paying down her loans during the pandemic, because interest rates were temporarily zeroed out. Sosa says before the pandemic, she had about $89,000 in debt and now she has about $79,000.
All of her debt comes from her master's degree. Sosa says she received a full-ride scholarship as an undergraduate at Marquette University. After graduation, she was told she needed to a master's degree to be an economist, so she went back to Marquette and took out loans.
Now, she works as an economics instructor at MATC. She says her loan payments before the pandemic pause were between $600-$900 month.
"I have not been able to save for retirement," Sosa says. "I wanted to be able to get my PhD since I'm in higher education. I have not been able to do that. So a lot of my goals have been delayed or completely eliminated because of this debt."
Sosa says she's even delayed getting married because she doesn't want her partner to be affected by the debt.
Sosa tried to get public service loan forgiveness, she grew frustrated with the system and gave up for a time. Now, with new temporary flexibilities in place for the program, she's going to try again to qualify.
"The system has totally been mismanaged," Sosa says. "I don't believe [Biden's debt cancellation] is enough, but I do believe it will help those students who took out smaller loans."
Sosa is unsure if she was Pell-eligible during her undergraduate years, so it's unclear whether she would qualify for $20,000 or $10,000 in debt forgiveness.
Nick Hillman, the college finance expert at UW-Madison, says the loan cancellation will help those who are most likely to default on their loans. He says students who default tend to have right around $10,000 in debt. Often, they’re the students who have some college, but didn’t finish their degree, so they struggle the most to pay back what they owe. Those borrowers will have a clean slate, or close to it.
Still, Hillman says temporary loan forgiveness doesn’t solve the larger problem of college affordability.
"Certainly, it can help borrowers who have already fallen into the river, they’re drowning in the river of debt and struggling — and so this current solution can help them get out of the river and prevent them from more harm," he says. "But what it doesn’t do is prevent more people from falling into the river in the first place. When school starts this year, students are going to continue taking out loans. In a few years time, we’ll be back in the same situation."
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