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Wednesday, June 19, 2024
Student Loan Collection

UW-Madison students grapple with resuming student loan payments

Students around the country are facing the reality of student loan payments resuming on Oct. 1. 

The repayments were initially put on hold in 2020 by the Trump administration due to the pandemic. The hold, initially set to expire in 2022, was extended an additional year by the Biden administration, which described the situation as a “student debt crisis” and made student loan forgiveness a major political goal. 

Biden also announced an unprecedented federal student loan forgiveness plan last year that proposed up to $20,000 in loan forgiveness per eligible student.

“This administration has definitely done pretty much whatever they can think of to be more pro-borrower,” said Benjamin Lee, a chairperson of the Wisconsin Coalition on Student Debt. “But recall that everyone is still just taking out student loans as they always have, so these aren’t necessarily permanent fixes.”

Biden’s actions to curb student debt were controversial from the beginning, with the issue taking on a highly partisan nature. On the state level, the loan forgiveness plan prompted support from Democratic Gov. Tony Evers and a lawsuit from a conservative interest group.

“It’s a tough political climate,” Lee said. “It’s unfortunate that student loans have become so politicized.” 

Ultimately, the most ambitious plans for loan forgiveness did not come to fruition. The plan was bogged down by legal troubles before being killed by the U.S. Supreme Court last summer, signifying a major setback for any future plans of federal student loan forgiveness.

The political whirlwind surrounding student loans will have an immense impact on many students’ finances. According to the University of Wisconsin-Madison’s Student Success Through Applied Research Lab, over 700,000 Wisconsinites hold a combined federal student debt of $23.1 billion as of 2020.

“A lot of my post-college plans have been focused, to some extent, on figuring out how to pay off my loans,” said Holden Ringle, a 2023 UW-Madison graduate. “I don’t have as much in the way of student loans as some people do, but even with what I do have it is a weight financially.”

High interest rates contribute to the financial burden. According to Forbes, interest rates on federal student loans are up across the board compared to last year. 

“Interest rates are at an astronomical level,” said Axel Semidey, a junior at UW-Madison. “By the time people actually come around to paying these loans, it’s almost impossible.”

Initial hopes of loan forgiveness are long gone for most, but relief may still be available to select students. Income-based plans like SAVE, launched by the Biden administration last summer, offer lower monthly payments to eligible students. Over 4 million people have enrolled in the SAVE repayment plan as of September 2023.

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“In my case, it has decreased my monthly payment to zero,” Ringle said. “I’ll be honest, I still don’t entirely understand how the interest works with that, so I’m trying to pay them off as quickly as possible, but it has been very helpful.”

Teachers, federal employees, medical professionals and people with disabilities may be eligible for federal loan forgiveness programs

Additionally, Wisconsin’s Public Service Loan Forgiveness Program provides student loan forgiveness for state employees who have made 120 monthly payments under a repayment plan while working full-time for an employer, though restrictions apply. 

Despite programs with a more limited scope remaining in place, Lee noted that the accessibility of debt forgiveness is limited even for potentially eligible borrowers.

“Historically, there’s been a fair amount of bureaucratic red tape and sort of ticky-tack requirements that have probably locked worthy borrowers from achieving the sort of forgiveness or discharge that they need,” Lee said.  

Additionally, the volatility of the politics surrounding student loans leave some wondering whether these plans will even stay in place. Ringle told The Daily Cardinal they worry it’s “only a matter of time” until the SAVE plan is also walked back.

According to a May study from Ipsos, a majority of borrowers support the initial plan of $20,000 in relief and over half support forgiving all student loan debt. Although the general public has a more mixed opinion on the issue, seven out of 10 Americans indicated support toward actions that would make college more affordable. 

Despite this, political gridlock leaves many frustrated with lack of any concrete legislation.

“There’s so many people who are lobbying to limit what they can actually do,” Semidey said. “Maybe one day we might see loan forgiveness, but it doesn’t seem like something that’s gonna be in the foreseeable future.” 

Given increasing interest and the high cost of tuition, some students are skeptical that they will be able to pay off their loans at all. 

“Insofar as a college education is no longer a guarantee of a respectable salary, we have to understand that there are cases where a student loan cannot ever be repaid,” Ringle said. “And in those instances, forgiveness is necessary for a civil society and for an equitable society.”

There are still things students can do to prepare for debt repayments. Lee recommends creating an account at the Office of Federal Student Aid’s website, which provides resources and information about federal student loans.

“Just having an account there and making sure your contact information is up to date means that you’ll be more informed and more on top of your loans than a lot of folks, and that’s a good place to be,” he said.

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