Come August, nearly 25 million individuals burdened by student loan debt across the country will begin receiving emails pertaining to the process of debt forgiveness. Another attempt by the U.S. Department of Education, this move paradoxically attempts to correct earlier flawed attempts at managing the financial crisis in academia. An earlier proposal by the Joe Biden administration was duly stopped in its tracks by the Supreme Court in 2023, making it abundantly clear that original plans weren’t thoroughly developed or sufficiently convincing.
In the state of Wisconsin, a centrifuge of debt-fueled chaos twirls unstoppably with over 700,000 residents tangled in its whirl. The exact count of individuals crippled by student loans in the state, as per the latest data in March, was a staggering 724,600. It appears that the kernel of the problem that Biden’s administration seeks to address with these emails lies squarely with these borrowers, and the burgeoning figures nationwide.
Breaking down the dread of average student loan debt in Wisconsin, it stands at a significant $31,679 per individual – an alarming burden when you consider that a majority of these borrowers are aged under 35. Distressingly, this is actually lower than the national average debt which is recorded at $37,853 by the Education Data Initiative in July. This fact does seem to put a dent in the perception of Wisconsin’s plight, but only if we disregard the utter scale of burden students across the country face.
With staggering loans burdening Wisconsin, the combined student debt shoots up to an astronomical $23.3 billion, an amount that the state’s residents owe to the Education Data Initiative. This is a worrying sign of a looming financial crisis where the majority of borrowers owe under $40,000, though it must be noted that a small yet significant 1.5% of the Wisconsin population faces an oppressive debt exceeding $200,000.
The gravity of the student loan burden in Wisconsin can be further broken down into categories. The data from March classifies 110,000 borrowers owing less than $5000. There are 122,300 borrowers in the bracket of $5000 – $10,000, and 153,800 owe between $10,000 and $20,000. A further 171,400 are stretched between $20,000 and $40,000. Within the higher ends of the scale you’ve got 67,500 borrowers under $40,000 – $60,000 in debt, 39,200 between $60,000 and $80,000, 19,200 from $80,000 to $100,000. About 29,600 are in the $100,000- $200,000 range and 11,600 owe over a blistering $200,000.
When placed in the national context, Wisconsin’s student debt, though burdensome does not project as an outlier. When WalletHub, a personal finance company, ranked all states on student debt, Wisconsin staked a claim squarely in the middle, placed at 25th rank. This information further takes the weight off Wisconsin’s struggles in contrast to the rest of the nation but simultaneously draws stark attention to the sheer widespread reach of the crisis.
Further dissecting the aforementioned ranking, the evaluation was not solely based on the loan debt but also included other factors. These metrics consisted of average student debt, proportion of student borrowers, student work opportunities, and unemployment rates among youth. In terms of student loan indebtedness, Wisconsin ranked 23rd whereas 26th for student work opportunities, showing that student debt and lack of employment opportunities seem to be having an unfortunate correlation.
In order to solve the murky waters of student loans, the Department of Education is attempting to establish communication through emails from August. They assert that borrowers with at least one outstanding federally held student loan will be provided with updates on potential debt relief. However, given the administration’s track record, one wonders whether this plan will prove any more fruitful or effective than those of the past.
Interestingly, these emails contain an opt-out option, available until August 30, for those who do not wish to have their debts absolved. A peculiar feature, considering the gravity of the financial strain. One could wonder why anyone possibly burdened under student debt would turn down an opportunity to alleviate their financial concerns. However, this decision will not be reversible, according to the department, and those individuals will be temporarily opted out of forgiveness due to enrollment in income-driven repayment plans.
In the prospective timeline, a follow-up email with additional information detailing eligibility rules and debt forgiveness will be delivered once the plan’s conditions are solidified in the fall. This, however, does not confirm any borrower’s eligibility and points to yet another clear instance of the administration’s strategy of not clearly outlining rules before sending out these indicative emails.
Despite the disheartening numbers and the extensive outreach, Biden’s relief measures are expected to benefit only about 25 million people. A fig leaf considering the monumental 40 million plus US residents trapped by student debt. The ineffectiveness of this provision and the question of whether it truly resolves the issue still looms large, as a vast number of those affected would not stand to benefit.
As per the rules drafted in recent term by Biden’s administration, four specific categories of borrowers are deemed eligible for debt forgiveness. These include those people who are further in debt now than at the start of their repayments and distressed borrowers who have been in repayment for decades, struggling to break free. Also considered eligible are individuals who qualify for loan forgiveness but haven’t yet applied, and those who enrolled in programs with poor financial returns.
Evidently, these loans and the attempts at their forgiveness are a telling example of the administrative bungling at hand. The lack of foresight, planning, and the failure to reach out to those truly affected by the crisis is clear in the stipulations of these rules. Instead of solving the economic hardships thrust upon students, these measures only serve to further highlight the ineffective decision-making at play.
Clearly, the promises of sweeping student debt relief announced with pomp are far from the realities of execution. The strategy of holding off on the specifics, offering opt-outs, and not reaching out to all those affected raises questions about the true intent behind these actions. This is just yet another misstep in the long list of flawed attempts, seemingly confirming that the Biden and Harris administration is not equipped to deal with the enormity of the student debt crisis.