MADISON, Wis. — President Joe Biden’s Wednesday announcement the federal government plans to forgive up to $20,000 in federal student loans for some borrowers was welcome news for the more than 785,000 Wisconsin residents that hold around $24.7 billion in student debt.
“For borrowers with household incomes of $250,000 or less or individuals with an income of $125,000 or less, they will receive up to $10,000 of student loan relief,” explained Helen Faith, the director of the University of Wisconsin-Madison’s Office of Financial, “and for borrowers who additionally received Pell Grants — so that would typically describe our borrowers who are at the lower end of the income scale when they’re attending school — they would receive up to $20,000 of loan forgiveness.”
According to the White House, Pell Grants covered 80% of college tuition in 1980. Since then, tuition has tripled while Pell Grants have remained flat.
Scott Brown, a UW-Madison student who took out student loans for both his undergraduate and graduate studies, knows that fact firsthand.
“I think I got a Pell Grant for a lovely $8,000 for a $40,000 a year kind of tuition,” he said.
The plan, he said, will provide relief to those who need it and help everyone.
“People can go to college and become educated contributors to the global economy and not be saddled with tons of debt,” he said.
The plan also extends — for the final time — a pause on student loan repayments put in place due to the COVID-19 pandemic. Payments will resume in January 2023. It will also lower the amount borrowers are required to pay from 10% of their discretionary monthly income to 5%.
Many of those who meet the income requirements will need to submit income data to the U.S. Department of Education. The department said an application for that will come by the end of the year.
Without doing something to make the cost of higher education more affordable, Brown said, the U.S. will lag behind other nations.
“We won’t have a great economic future if we have people electing that college is too expensive, college is too much of a burden, so anything that we can do to continue to lower tuition costs and raise support for students, I think, is only good for America,” he said.
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