Why More Than 100,000 Wisconsin Student Borrowers Are Now In Default
Federal pauses are over, repayment rules have shifted and many residents are struggling to catch up on loans.
Madison resident Marie Stolzenburg poses for a picture with her son Fox. Courtesy Marie Stolzenburg
Madison resident Marie Stolzenburg was among the first wave of thousands of student loan borrowers nationwide to receive a new deadline: She had 90 days to pick a new plan to repay her student loans, or she would be automatically enrolled in one.
Stolzenburg was enrolled in the Saving on a Valuable Education (SAVE) plan. The plan was formally sunset on July 1 this year, as Trump Administration officials say they are streamlining the student loan repayment process.
Under the SAVE plan, Stolzenburg was paying $100 per month towards her student loan debt. Going forward, she’ll have to pay at least $500 per month under the cheapest plan now available.
“I’m going to find this to be incredibly challenging,” Stolzenburg told WPR. “I’m a single mom. I live in a part of the state where rent is extremely high. The cost of living has gone up and being a single mom, on top of all of those things, makes everything more expensive.”
Stolzenburg said she reached out to a financial adviser at her bank and a Wisconsin nonprofit called the Wisconsin Coalition on Student Debt to see what options she may have to reduce her monthly payment.
“Both of them were saying: ‘I’ve heard this story over and over again. You’re not the first person who has come to me with this. I’m so sorry to deliver you this bad news. There isn’t anything that I can do for you,’” Stolzenburg said. “I just feel like, what the hell am I gonna do?”
Borrowers like Stolzenburg are facing higher payments: A recent Wisconsin Watch analysis of Associated Press data found the rate of borrowers in student loan default in Wisconsin rose by nearly 50 percent since last fall.
During the COVID-19 pandemic, the federal government allowed borrowers to suspend student loan payments as a pandemic relief measure. This suspension and the subsequent one-year grace period ended in fall 2024.
A student loan borrower is considered in default if they have failed to make payments for roughly nine months. The Wisconsin Watch analysis finds that more than 100,000 Wisconsin residents haven’t made payments on their loans in more than 360 days.
Carole Trone is executive director of Wisconsin Coalition on Student Debt. She told WPR’s “Wisconsin Today” she worries more borrowers will fall behind on their payments after the end of the SAVE plan, running the risk of facing financial consequences from going into default.
“It’s going to affect your credit rating, and with a lower credit score, you’re going to have more difficulty getting loans for cars, getting a mortgage,” Trone said. “You won’t be able to go back to school and borrow federal loans. You could possibly have your wages garnished — that is a right that the Department of Education exercises.”
Trone said borrowers should log in to their federal student loan account and verify the loan balance, interest rate and loan servicer. Borrowers should reach out to their loan servicers if they have defaulted on their student loans.
“Once you start that you start that process with your servicer. They will walk you through what are the steps that you need to make. They will work with you to see what can be that affordable payment,” Trone said. “But it’s very important that people avoid that stage of default, and then if they do find themselves in it, definitely reach out. This is not a problem that is going to go away.”
Stolzenburg said she is making changes in anticipation of the higher payment, like opting to skip a vacation next year as well as evaluating ways to save money on food and gas.
“My kid is in sports. Those are exorbitant fees as it is. Is there going to be a situation in the future where I have to tell my son, ‘No, you can’t go to that summer camp’ or ‘No, you can’t play soccer this year?’” Stolzenburg said. “Those are tough things to have to think about, removing opportunities for my kid.”
Wisconsin student loan borrowers face higher payments as default rates rise was originally published by Wisconsin Public Radio.
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