Updated: Jul 28
Wisconsin is well known for being America's Dairyland, but the state has so much more to offer its' residents. Unfortunately, Wisconsin residents and college graduates are not immune from the burdens of student loan debt.
In fact, according to Student Loan Hero, the average outstanding balance for past Wisconsin borrowers is $30,023. And while this is nearly 20% less than the national average, it is still a lot of money.
State-wide, there are over 800,000 borrowers holding a cumulative debt balance of over $24 billion. Thankfully, the state has introduced a couple of state-sponsored student loan forgiveness programs designed to help Wisconsinites with their student debt.
Student loan forgiveness in Wisconsin
As of July 2022, there are three state specific student loan forgiveness programs available to Wisconsin residents. They are:
Rural Physician Loan Assistance Program
Health Professions Loan Assistance Program
University of Wisconsin Law School Loan Repayment Assistance Program
Do keep in mind that all of these programs offer forgiveness for your federal student loan debt only.
1. Rural Physician Loan Assistance Program
Wisconsin's first forgiveness program is the Rural Physician Loan Assistance Program, designed for WI physicians, dentists, and psychiatrists. To be eligible for the program, these healthcare providers must practice medicine in an outpatient capacity and in an areas designated as a Health Professional Shortage Area (HPSA) or otherwise rural.
Rural areas are defined by the Wisconsin Office of Rural Health as cities, towns, and villages with populations less than 20,000 people that also happen to more than 15 miles away from a municipality with at least 20,000 people.
Those participating in the program can receive up to $50,000 in loan assistance.
2. Health Professions Loan Assistance Program (HPLAP)
Wisconsin's Health Professions Loan Assistance Program is a student loan forgiveness program for primary care physicians (and others) who serve in federally designated HPSA for a minimum of three years.
The program is intended to provide access to quality care to underserved areas of WI.
Eligible healthcare providers include:
Primary care physicians (PCPs) - family medicine, internal medicine, pediatricians
Physician assistants (PA)
Nurse practitioners (NP, APRN)
In addition to these groups of providers, the program does allow physicians and psychiatrists working in rural areas that are not HPSAs to qualify.
In terms of the forgiveness you may be able to achieve, the program offers up to $50,000 in loan assistance to physicians, dentists, obstetricians, and psychiatrists, while other providers may be eligible to receive up to $25,000.
One other detail to note - physicians and psychiatrists working in a rural community may also be able to participate in the Rural Physician Loan Assistance Program.
3. University of Wisconsin Loan Repayment Assistance Program
In 2002, The University of Wisconsin began sponsoring a loan repayment assistance program to help its law school graduates that decide to work in public interest jobs after graduation.
Typically, qualifying positions are legal-based positions working for either a governmental agency or a nonprofit organization and making under a certain salary.
Learn more about the UW LRAP.
Federal student loan forgiveness programs for Wisconsinites
Residents of Wisconsin also have access to all of the Department of Education's federal forgiveness programs, if eligible. These programs are only available to those with federal loans, and each program has differing requirements for which federal loans are accepted.
You should consider the following federal programs:
Teacher Loan Forgiveness
Perkins Loan Cancellation
1. Income-Driven Repayment
Starting in the Summer of 2023, those enrolled in the REPAYE plan will begin to transition over to the Department of Education's newest income-driven repayment plan: Saving for a Valuable Education.
These programs all largely work the same, as they establish new monthly payment amounts for you (recalculated annually), based on your household size and discretionary income. After paying 10-20% of your monthly discretionary income for 20-25 years (these figures are where the programs differ), your remaining balance will be forgiven by the Department of Education. Not the fastest path to forgiveness, but an option nonetheless.
2. Public Service Loan Forgiveness
The most lucrative of the federal forgiveness programs, PSLF offers the opportunity to achieve complete student loan forgiveness after making 120 qualifying monthly payments.
You'll need to be on one of the four income-driven repayment plans to have your 120 monthly payments count, and upon completion of these payments, you'll gain eligibility to have your remaining student loans forgiven.
PSLF is only an option for the Direct Loan program, and it may require you to consolidate your loans to participate in the program.
Depending on how much debt you have, University of Wisconsin law school grads in public service roles may be well served to pursue PSLF.
3. Teacher Loan Forgiveness
Teachers in Wisconsin may also be eligible to participate in the federal Teacher Loan Forgiveness program. TLF generally requires you to:
Teach in a low-income school
Have a classroom education role
Work five complete and consecutive academic years
Have eligible Direct Loans
Once you've met all of these requirements, you'll become eligible for either $5,000 or $17,500 in loan repayment assistance, depending on the subject you teach. At this time, the full amount of forgiveness is reserved for those teaching mathematics, science, and special education, though there may be other subjects too.
4. Perkins Loan Cancellation
The Federal Perkins Loan program was discontinued in 2017, but there are still many borrowers statewide holding these loans. The Perkins Loan Cancellation program helps eligible borrowers to achieve forgiveness over their Perkins Loans over a period of five years.
Typically, you'll need to work in public service/interest jobs, such as law enforcement, healthcare, and education.
Does Wisconsin tax student loan forgiveness?
Currently, student loan forgiveness in Wisconsin may be taxed under state law. This became a point of contention before President Biden's forgiveness was shot down by the Supreme Court, as action would need to be taken by the state legislature in order to eliminate this tax.
So for those that do receive forgiveness, they should prepare to pay income tax on the money, as it will be added to your their gross income for the year.
The one exception to this is any benefits paid out to those on the Public Service Loan Forgiveness (PSLF) program.
Other student loan options in Wisconsin
Most of the forgiveness programs available in Wisconsin cater to those working in healthcare/public service or to those with a certain type of outstanding debt. Unfortunately, this means that there are thousands of Wisconsinites that will not qualify for student loan forgiveness.
And that's okay, because there are other strategies you should consider. At the top of this list is refinancing with a private lender.
Conducting a simple rate check with Splash Financial is a great place to start, since Splash is a marketplace that will compare your rates across a network of participating lenders. The whole process will only take a couple minutes and their rate check will not impact your credit score.
Student loan forgiveness in nearby states
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