Over 700,000 Wisconsinites will once again face consequences for missed federal student loan payments after five years without mandatory collections ended May 5, leaving some borrowers feeling uncertain.
“They don't know what they're supposed to be doing. They may not know what total debt they have. They may not know who their loan servicer or servicers are,” Carol Trone, executive director of Wisconsin Coalition on Student Debt, told The Daily Cardinal.
Trone said some borrowers and University of Wisconsin System students face confusion amid the funding tug-of-war.
Some borrowers are unable to contact their loan servicers, are stuck in the Saving on a Valuable Education (SAVE) program’s pause or caught in the six-week period where no one could apply for an income-driven repayment plan, Trone said.
On April 21, the U.S. Department of Education announced collections would begin May 5 for default or failed loans following a five-year payment pause. Then-President Donald Trump put a hold on loan payments during the pandemic and the pauses were continued during President Joe Biden’s term.
“There were no required payments. There were no required collections. During that time, borrowers could choose to continue to make payments, but many did not,” Trone told the Cardinal.
Former President Joe Biden tried multiple times to give broad student loan forgiveness, which the courts blocked, eventually leading him to extend the federal payment pause seven times, ending in September 2023. An additional 12-month grace period was added, Trone said.
During those extra 12 months, loan repayment was technically due, however, collections and credit report actions were not going to start until October 2024. Since then, borrowers with outstanding loans who have missed payments are considered to be in default, meaning the government can seize their wages, tax refunds and social security benefits if they do not pay back their loans 270 days after a missed payment.
Wisconsin has around 725,000 people with outstanding payments totaling $23.6 billion in federal student loan payments. The average UW System graduate has a little over $30,000 in debt, and half of UW System students rely on federal aid to finance their education, Trone said.
President Donald Trump’s “One Big Beautiful Bill Act,” if passed, would eliminate types of student loans by changing loan caps, payment plans and who can qualify for certain loans. The bill would also adjust income-based repayment plans.
Low-income undergraduate students would no longer be able to access subsidized Direct Plus loans, a type of federally subsidized loan for parents and graduate students.
The bill would only allow parents to take out a Direct Plus loan for their student if the annual amount borrowed is less than the cost of attendance, and if the student maxes out their unsubsidized direct loans.
Under the bill, many federal repayment plans, including the SAVE program, are combined into one, income-based repayment plan. Borrowers can either choose to pay a certain percentage of their income or a standard fixed payment over a certain period of time, which could result in higher payments for many borrowers.
Higher education leaders, like UW System President Jay Rothman, criticized the bill saying he was “dumbfounded” by the move.
“It makes no sense for the U.S. to narrow opportunities if our country wants to win the global War for Talent. I’m dumbfounded that cutting educational opportunities would even be considered when our economic vibrancy is at stake,” Rothman said in a statement.
SAVE program
During the Biden administration, Wisconsinites formerly saw relief through the SAVE plan, an income-driven repayment plan launched after the U.S. Supreme Court struck down an earlier proposal for universal loan forgiveness. On Feb. 18, this program was paused by a U.S. appeals court after seven Republican-backed states filed lawsuits arguing Biden exceeded his authority.
The SAVE program gave borrowers a calculation tool for their living budgets, taking into account loan payments and allowed borrowers to qualify for forgiveness in as little as 10 years, Trone said.
Many Wisconsin borrowers who were already in an income driven repayment plan got automatically transferred to the SAVE program, Trone said.
The SAVE program is not officially dead, but Trone said it is highly unlikely to survive court challenges. While the program is being litigated, borrowers were put in forbearance — essentially put on hold.
Trone said some borrowers may appreciate the lapse in payments, but others who want to pay down their loans have been unable to do so.
“For borrowers who are trying to make payments, who are trying to qualify for public service loan forgiveness, it has not helped them, because they have to make the payments to be able to move towards the point of applying for loan forgiveness,” she told the Cardinal.
Amid all the confusion, Trone said the first step for every student loan borrower is to look at their loans, know what they owe, who their servicer is and to get an income-driven payment plan started.
Borrowers can also log into their student aid accounts and contact the Wisconsin Coalition on Student Debt.
Clara Strecker is the state news editor for The Daily Cardinal. She previously served as copy chief. Clara has written in-depth on the 2025 Wisconsin Supreme Court race, the 2024 presidential election and abortion rights. She will spend the summer interning with WisPolitics. Follow her on X at @clara_strecker.
