Wisconsin Student Loan Holders Could Have Debt Reduced

Saturday, August 27th, 2022 -- 8:24 AM

(By Rich Kremer, Wisconsin Public Radio) -Around half of Wisconsin residents with federal student loan debt could see their balances greatly reduced or wiped clean under President Joe Biden's debt forgiveness, according to data from the U.S. Department of Education.

On Wednesday, Biden announced his administration plans to cancel up to $10,000 in federal student loan debt for individuals making less than $125,000 per year and for borrowers with family income under $250,000. For those who received need-based Pell Grants in college, up to $20,000 in loans could be canceled if they fall under the same income caps.  Not all student loans qualify for cancelation under the Biden plan, though. Those who borrowed from private lenders will get no relief, nor will borrowers who received federal loans financed by banks and nonprofit lenders under the Federal Family Education Loan program prior to 2010. The Department of Education has said FFELP borrowers will be able to consolidate the older loans under its Direct Loan Program to become eligible for forgiveness. Federal data compiled by the Student Success Through Applied Research lab at UW-Madison shows 715,800 Wisconsin residents carried a total of $23.1 billion in student loan debt in the first quarter of 2021 for an average of $32,230 per borrower.

When broken down further, 52 percent of federal borrowers had $20,000 or less of outstanding debt. Those who owe between $20,000 and $40,000 accounted for 23 percent of all borrowers. At the same time, a small share of people held a large share of the overall student loan debt in Wisconsin. As of the spring of 2021, six percent of borrowers had outstanding balances of between $100,000 and more than $200,000. In other words, around 39,600 people owed the federal government more than $7 billion for their education, according to the SSTAR Lab.

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