A bandage? A huge help? Not needed? Here's what 5 Wisconsin borrowers think about student loan forgiveness

UW-Milwaukee graduates during a 2019 commencement ceremony.
UW-Milwaukee graduates during a 2019 commencement ceremony.

President Joe Biden announced Wednesday that he is canceling $10,000 in student loan debt for Americans earning less than $125,000 per year, a move that will help hundreds of thousands of borrowers in Wisconsin.

Biden is offering an additional $10,000 of debt forgiveness for students who received Pell grants in college, as a way to target relief toward those from the lowest-income households. He also extended a pandemic-induced pause on federal student loan payments through Dec. 31.

The long-awaited executive order delivers on one of Biden's campaign promises just months before the midterm election. The decision caps months of deliberation and pressure from both parties. Progressives argue an even larger share of debt should be canceled while Republicans say the move is unfair and will cause more inflation. Conservatives have also questioned the legality of Biden's order, making a legal challenge likely and the implementation of loan forgiveness unclear.

More: Do I qualify for student loan forgiveness? What to know about Biden's debt plan.

More: How soaring inflation is complicating Biden's decision whether to forgive student loan debt

Wisconsin borrowers hold nearly $24 billion in federal student loan debt, according to the latest federal education data. About 68%, or nearly 500,000 borrowers, owe $10,000 or more.

A handful of borrowers talked to the Journal Sentinel about the loan forgiveness. Some borrowers were supportive while others voiced a variety of concerns. Several noted that $10,000 in loan forgiveness won't fix the larger problem of the increasing cost to earn a college degree.

Austin Hammond, 25


Austin Hammond considered not even going to college. That's how much he worried about the debt he would take on to earn a degree.

As a compromise, Hammond enrolled at Northeast Wisconsin Technical College. A two-year degree seemed like less of a financial commitment than a four-year commitment for someone who would be the first in his family to go to college. He took out loans, signed up for a full course load and worked between 25 and 40 hours per week to earn his associate degree in digital media and technology.

Then Hammond made a big decision: He decided to continue his education. He graduated from the University of Wisconsin-Oshkosh in spring 2021 with a degree in political science and about $29,000 in federal loan debt.

"I think it was worth the investment," he said of his bachelor's degree. "It was worth it to get the skills and I think it has a lot of value."

The Menasha resident, who works as a nonprofit outreach coordinator and also serves as a city alderman, has paid down some of his debt during the student loan moratorium and said his payments will rise to $300 when the pause ends. He estimates he'll be able to pay off all of his debt in 2032.

Older generations don't understand the experience of college students today and how other aspects of social mobility, like home ownership, are now arriving so much later in life because of student debt, Hammond said.

Having $10,000 of student loan debt forgiven is "a tremendous help to borrowers to be able to pursue their dreams," he said. He also pushes back against people who call the concept a "Band-Aid" or "one-time fix."

"I don’t think it’s temporarily relief," he said. "It would help some people for life, especially in this moment when we have a once in a lifetime pandemic, prices skyrocketing because of corporate greed and an increasing cost of education. It would help a whole lot of people."

Joe Krantz, 21


Joe Krantz hasn't graduated college yet and he's already paid off the majority of his student loans. That's through a lot of hard work and a streak of good fortune, he said.

Krantz spent his freshman year at St. Norbert College near Green Bay. He said he received a good-sized scholarship but still had to take out about $20,000 in loans.

The cost of that single year at St. Norbert pushed Krantz to look elsewhere to finish his degree. UW-Madison offered a scholarship that covered most of his tuition for his sophomore and junior years, he said. He was still on the hook for housing, food and textbooks, as well as tuition for his final year of school.

To pay off his debt and make enough to cover his expenses, Krantz, of Waukesha, said he has worked up to 50 hours per week in the summers for a landscaping company and up to 30 hours per week during school. The availability of online classes during the pandemic offered him a more flexible schedule that could accommodate his work hours.

Krantz, who leads the UW-Madison chapter of College Republicans, doesn't support loan forgiveness. For one, he said it unfairly helps college-going individuals while putting people who cannot afford to go to school at a disadvantage. He also said the move will be "absolutely devastating" to the economy.

Krantz would prefer to see more financial aid counseling for high school students and a shift away from a four-year degree being virtually the default option after high school. Many technical and trades schools offer great training at a much more affordable price, he said.

David Wise, 60

The situation feels hopeless to David Wise.

He took out about $75,000 in loans for his bachelor's, master's and law degree back in the 1980s. Over the next three decades, he said he's paid off about $200,000 but due to accumulating interest and penalties for periods when he couldn't afford to pay, he still has more than $230,000 left to pay.

People ages 50 and older are among the fastest-growing groups of student loan borrowers over the past two decades, according to Federal Reserve data.

Some older adult borrowers took out loans to pay for graduate school so they could receive a promotion or higher pay. Others switched careers and needed new skills to supplement the change. And there are many on the hook for loans to pay for their children's education.

"I think others view loan forgiveness as benevolent gratitude for deadbeats and I don’t think that’s an accurate representation at all," Wise said.

Wise started work as a public interest lawyer, a rewarding career but one that barely covered his bills. He took a second job in the restaurant industry.

When funding for the legal job dried up, he said he went into forbearance, which allows borrowers to pause their debt payments for a short time while still accruing interest. Other financial circumstances also caused him to default later in life, he said, leading to hefty penalty fees.

Wise said he got out of default as soon as he could by doubling payments for six months. He also consolidated his loans, but in doing so said he was stuck with a fixed interest rate of 10.5%.

Wise said he's worked his way up from earning $30,000 per year to drawing a six-figure annual salary in recent years, he said. But a collections agency garnishes 25% of his wages, he said.

"$10,000 (in loan forgiveness) isn’t going to do anything for me," he said. "It's better than a stick in the eye, I suppose, but at this rate, at 60 years old, I realize there is no way I will ever repay my student loans. There’s just no way."

Silbi Isein, 33


Silbi Isein has an intimate understanding of how complex student loans can be. She works in the financial aid office at UW-Milwaukee, trying to help students understand their options and grasp the consequences. She also personally has about $50,000 in federal loans.

When Isein was college-shopping, the Racine native knew she wanted to stay in Wisconsin. After exploring her options, with affordability as her top priority, she landed at UWM. Because she switched majors at one point, it took her five years to graduate instead of four.

Now, she's in graduate school at UWM in a program that covers her tuition in exchange for her work in the financial aid office. The work aligns with her interest in higher education policy and has opened her eyes to the need for more financial literacy.

Some individuals coming into the office are current students, often the first in their families to go to college or from a low-income background and overwhelmed by how to pay for school, Isein said. Others are recent graduates who don't understand what loans they were signing up for or how interest rates worked.

"To be honest, it can be frustrating," she said. "Personally, I don’t put blame on them. There needs to be an information highway. Students need to understand what this means."

Isein doesn't regret the debt she took on to fund her own college degree. Education is "the best investment I could make for myself," she said. "But the cost it took to get to that, the amount of loans I took out, it is a point of frustration. Why would anyone need to take four, five, six digits worth of student loans to get an education? It’s really an investment to society."

But Isein also isn't completely sold on loan forgiveness. She wants more details. Like what about today's high school and middle school students? How will the nation's future borrowers be able to afford college when tuition nationally increases year after year?

"Forgiveness is a step in the right direction but it’s not an end-all, be-all," she said. "It can bring relief to a lot of people but if we don’t address the root cause. History will repeat itself."

Brittany Dahl, 32


Come next spring, Brittany Dahl will have a graduate degree in health and human services administration in hand. She'll also walk away with about $81,000 in federal student loan debt.

The number, which includes debt taken on for her associate and bachelor's degrees, worries Dahl. She already works full-time as an IT analyst while also juggling graduate school. She figures she'll have to get a second job after graduation to be able to afford the estimated $600 monthly payment.

Having $10,000 of Dahl's debt forgiven "really means nothing," she said, because her roughly 6% interest rate would add the same amount back onto her total debt within a few years.

"It’s a Band-Aid," the Sparta resident said. "It’s a political stunt. And it’s not addressing the huge underlying issues of the student loan system."

One solution, Dahl said, is by restoring bankruptcy protections for borrowers.

Currently, student loan borrowers can discharge debt through bankruptcy but it's quite difficult and expensive. They must prove "undue hardship," which isn't fully defined in bankruptcy code and is typically fought in court by student loan lenders that have far more legal resources.

A bill introduced last year by Sen. Dick Durbin, D-IL, and cosponsored by Sen. John Cornyn, R-TX, and Sen. Josh Hawley, R-MO, would simplify the process. Borrowers seeking discharge would have to wait at least 10 years, a waiting period designed to prevent scenarios in which students try to eliminate their debt immediately after graduating.

In addition, schools where at least a third of their students receive federal loans must partially repay a student loan to the Department of Education if that loan is later discharged in bankruptcy. The amount the institution must repay depends on their average default and repayment rates.

The bill has yet to receive a vote in committee.

Contact Kelly Meyerhofer at kmeyerhofer@gannett.com. Follow her on Twitter at @KellyMeyerhofer.

This article originally appeared on Milwaukee Journal Sentinel: Wisconsin student loan borrowers weigh in on Biden loan forgiveness