MILWAUKEE — President Joe Biden’s decision to forgive $10,000 to $20,000 in federal student loan debt will impact borrowers across the country, including hundreds of thousands in Wisconsin.
692,000 Wisconsinites have federal student loans to the tune of $21 billion. The median federal student loan debt for borrowers in Wisconsin is $17,323 according to researchers at UW-Madison.
While some are celebrating relief, others couldn’t be more frustrated about who will now foot the bill.
Wauwatosa teacher Tia Mohacsi has been out of college for 15 years. She’s ecstatic she no longer has to worry about the student loan debt that’s followed her since.
“It’s always there, kind of looming in the background and it’s a tremendous weight being lifted because it just opens up so many more opportunities,” she said.
Mohacsi says the $9,000 she still owes will be wiped out. But since she received a Pell Grant when she was in college, she could have had up to $20,000 canceled because her family income is below the threshold to qualify.
“Coming from a place of being a first-generation college graduate and relying heavily on scholarships and grants, but still wanting to do more other than having a degree, I’m just really happy that other people can benefit too,” she said.
Greenfield business owner Bret Eulberg never took out student loans and he thinks those who did should have to follow through on their commitment.
“You’re betting on yourself when you go to school and why should someone else pay for your bet,” he said.
While Eulberg didn’t take out student loans, he says his wife still owes $15,000 on her federal student loans. Although the president’s decision will affect Eulberg’s family budget, he doesn’t think it’s fair to taxpayers as a whole.
“I don’t think that someone that didn’t go to college should have to pay for my wife’s college career,” he said. “That was a choice that my wife and I chose.”
UW-Madison data shows about 22 percent of Wisconsinites have student loans, but that figure drops down to about 12 percent when you look at just federal loans.
UW-Madison education professor Nick Hillman leads a research lab that’s dedicated to understanding how student loan debt impacts borrowers after they leave college.
"1 in 5 are clear of debt in 5 years, 1 in 5 struggling and in default within 5 years, so that means you have 3 in 5 who are kind of in this muddy middle,” he said.
Hillman’s research shows nearly 50 percent of Wisconsinites between the ages of 18 and 34 have student loans, but that steadily decreases among older age groups.
He says student loan debt has put Milwaukee on the national radar for issues regarding racial disparities.
"They found that in ZIP codes that were majority white in Wisconsin, the student loan default rate was around 5 percent. They found that ZIP codes that were majority not white, and so that would include any number of people of color, had default rates around 20 percent and that 15 percentage point gap is one of the starkest in the country,” he said.
While this one-time federal student loan cancellation helps those who have already borrowed, Hillman says it doesn’t address the root cause of the issue because future college students will still be taking out the same federal loans and likely even larger amounts.
