Student Loan Forgiveness in Wisconsin

Wisconsin does offer student loan forgiveness programs. The state provides specific programs aimed at professionals, especially those in healthcare and rural areas, who make significant contributions to their communities. Programs such as the Health Professions Loan Assistance Program and the Rural Provider Loan Assistance Program are available, offering financial relief to those who qualify.

Moreover, the federal government also provides various loan forgiveness programs accessible to Wisconsin residents. So, no matter where your journey has taken you, there’s potential for relief.

Ahead, we’ll explore these programs in more detail.

Related: State Student Loan Forgiveness Programs

There’s good news for Wisconsinites carrying the weight of federal student loans. Several federal programs, brought to you by the U.S. Department of Education, offer relief based on your income or profession.

Public Service Loan Forgiveness Program

First up is the Public Service Loan Forgiveness (PSLF) Program.

You may qualify if you work full-time in a public service job (think government agencies, public schools, or nonprofits).

The goal: Make 120 qualifying student loan payments while employed full-time by the government, not-for-profit organization, or other qualifying employers, and say goodbye to your Direct Loans.

Income-Driven Repayment Plan Forgiveness Waiver

Next, there’s the Income-Driven Repayment Plan Forgiveness Waiver.

Starting in Spring 2023, if you’ve made monthly payments or been in forbearance or deferment for 20 years or more, you could see your remaining loan balance automatically wiped clean. This relief comes courtesy of an updated Income-Driven Repayment (IDR) account adjustment introduced in April 2022.

Note, if you have FFEL or Perkins Loans, you may need to consolidate into a Direct Consolidation Loan to qualify for the IDR Waiver.

But don’t worry — you can do this for free on the Federal Student Aid website, StudentAid.gov. Refinancing federal loans with private lenders eliminates your eligibility for this relief.

Teacher Loan Forgiveness Program

Are you a teacher? The Teacher Loan Forgiveness Program might be for you.

If you’ve worked full-time for five consecutive years in a low-income school or educational service agency, your federal Direct or Stafford Loans could be forgiven.

Forgiveness amounts can reach up to $17,500 for highly qualified math, science, and special education teachers and up to $5,000 for other eligible teachers.

Biden’s Student Loan Forgiveness Plan

Lastly, under President Biden’s debt relief program, a significant reduction in the remaining balance on education loans could be in the cards for many Wisconsin residents.

This program could erase up to $20,000 of debt for Pell Grant recipients who meet certain income criteria and up to $10,000 for other qualifying borrowers with loans held by the federal government.

Bear in mind.

The application process is currently paused due to a Supreme Court challenge.

But rest assured.

The Biden administration has extended the pandemic-related payment pause and interest rate freeze on loan payments.

The Department of Education data shows a considerable number of Wisconsin residents stand to benefit from these federal student loan forgiveness programs.

The final decision now rests with the Supreme Court. So, while the outcome remains uncertain, these federal programs offer hope for substantial student loan relief for those in Wisconsin.

While the Biden-Harris Administration’s Student Debt Relief Plan promises tax-exempt debt relief federally until 2026 as part of the American Rescue Plan Act, the state of Wisconsin’s unique tax laws complicate matters.

The state’s tax code diverges from the federal government’s, potentially leaving Wisconsin borrowers eligible for federal relief facing additional state income taxes.

The state’s Republican-controlled Legislature has yet to clarify whether their support for tax cuts includes a tax exemption for student loan forgiveness. This uncertainty persists despite Wisconsin’s record-high $6.6 billion budget surplus.

Enforcing this tax presents a challenge, as the state Department of Revenue lacks a mechanism to identify who has had their student debt forgiven. Despite this, tax professionals advise Wisconsinites to report loan forgiveness as income, even without receiving a 1099-C form.

Democratic Gov. Tony Evers supports a tax exemption for forgiven student loans, but key Republican leaders have remained silent.

In essence, while federal relief offers hope, taxpayers in Wisconsin may face additional state taxes on forgiven loans unless state law changes.

Wisconsin has two state-specific programs designed to help professionals in certain fields manage their student loan debt. Let’s take a closer look at these programs:

Health Professions Loan Assistance Program

This program is like a thank-you note from the state to healthcare professionals who are making a difference in their communities. You could be eligible for this program if you’re a healthcare professional working in an outpatient setting in a federally designated Health Professional Shortage Area (HPSA).

Eligible professions include certified nurse midwives, dentists, dental hygienists, nurse practitioners, physicians, physician assistants, and psychiatrists. If you qualify, you could receive up to $50,000 in student loan assistance, provided you commit to working in an eligible setting for three years.

For more information about this program, you can contact the Wisconsin Office of Rural Health.

Rural Provider Loan Assistance Program

This program is designed for primary care physicians, psychiatrists, and dentists working in an outpatient setting in a rural community in Wisconsin. The state defines rural as a city, town, or village with a population below 20,000 that is at least 15 miles from any city, town, or village with a population of at least 20,000.

You could receive up to $50,000 in education loan assistance if you qualify. But please note that eligible providers are limited to a total of two loan assistance awards during their careers.

You can contact the Wisconsin Office of Rural Health for more details and to apply for the program.