Ramen noodles, work study, food stamps, and the kindness of friends is what got a lot of students through college. If you were a first generation student, things were even tougher. No one told you that financial aid checks didn’t arrive until later in the semester, but you would need your books right away. Meal plans had to be bought. However, students usually couldn’t afford to include the weekend days. You would simply squirrel away food from the week and eat that on Saturday and Sunday. Getting an education was expensive when I went to school. The costs have only risen in recent years. Students and families have been willing to assume that debt because education is often essential for a better life. However, many have found the debt to be crippling.
According to a recent White House Fact Sheet, the total cost of both four-year public and four-year private college has nearly tripled, since 1980. Federal support has not kept up with inflation. Pell Grants once covered nearly 80 percent of the cost of a four-year public college degree for students from working families, but now only cover a third. That has left many students from low- and middle-income families with no choice but to borrow if they want to get a degree. According to a Department of Education analysis, the typical undergraduate student with loans now graduates with nearly $25,000 in debt.
Wisconsinites owe a cumulative $23.2 billion in student loan debt, according to data from the Education Data Initiative. The average Wisconsin borrower owes nearly $30,000 in student loan debt and more than 727,000 residents owe student loans. Yet, only 30% of our residents have a college degree. In some cases, the cost became prohibitive and students couldn’t afford to finish their degrees.
While others did complete their education, they may have received degrees that were all but worthless. A number of for-profit colleges actually defrauded their students. They were left with massive loan debt and no real job prospects. As a result, there has been a call for a review of student loan debt and how to help families mired in debt.
The effect on Black students has been most devastating. The White House reports that twenty years after first enrolling in school, the typical Black borrower who started college in the 1995-96 school year still owed 95% of their original student debt. Something had to be done.
While campaigning in 2020, candidate Joe Biden said he would work to “Forgive all undergraduate tuition-related federal student debt from two- and four-year public colleges and universities and private HBCUs and MSIs for debt-holders earning up to $125,000”. This week, Biden offered a compromise.
The Department of Education will provide up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education, and up to $10,000 in debt cancellation to non-Pell Grant recipients. Borrowers are eligible for this relief if their individual income is less than $125,000 ($250,000 for married couples).
Depending on their circumstance, many Wisconsin residents could see nearly 1/3 to roughly 60% of their student loan debt cleared. Among the state’s indebted student borrowers, 17.2% owe less than $5,000, which means their debt could be completely wiped out. This is HUGE! For families that are struggling to make these payments, this loan forgiveness announcement is a game changer. It changes the ability to purchase a home, lower overall debt, and support yourself or your family.