UW-Madison community discusses impact of expected student loan announcement

The nation’s federal student debt now tops $1.6 trillion after ballooning for years.
Published: Aug. 23, 2022 at 10:42 PM CDT
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MADISON, Wis. (WMTV) - President Joe Biden is expected to make an announcement regarding student loan relief and payments Wednesday. The University of Wisconsin- Madison faculty and former students the announcement would continue to have an impact on borrowers.

Former UW-Madison student Anna Nikolay has roughly $20,000 in student debt. She has not had to address those loans since the start of the student loan moratorium, which paused payments in 2020.

“After I realized it was going to keep extending, I started putting that money into a separate account and kept putting it there instead,” Nikolay said.

According to three people familiar with the plan, President Biden is expected to announce forgiving up to $10,000 in federal student loans for many Americans and extend a pause on payments to January.

UW-Madison School of Business lecturer Moses Altsech said the move is a temporary fix for a much bigger problem.

“There are some people for whom this will be very beneficial, but what it really is, is a one-off in terms of the relief, it doesn’t do anything to address the long-term rising cost of higher education,” Altsech said.

The nation’s federal student debt now tops $1.6 trillion after ballooning for years. More than 43 million Americans have federal student debt, with almost a third owing less than $10,000 and more than half owing less than $20,000, according to the latest federal data.

Altsech said even a potential $10,000 cancellation of debt would have varied impacts, all of it short sighted.

“This kind of relief is a temporary, one-time relief that doesn’t do anything in the long run,” he said.

Nikolay said while the moratorium pause is nice, the limbo of not knowing what is on the other side is strenuous when trying to plan for the future.

“You’re just kind of waiting for that to start up again, you never know exactly when it’s going to go so you have to have some money saved or ready to go again, just a little in the back of your head on the anxiety piece,” she said.

The continuation of the pandemic-era payment freeze comes just days before millions of Americans were set to find out when their next student loan bills will be due. This is the closest the administration has come to hitting the end of the payment freeze extension, with the current pause set to end Aug. 31.