But when I attended UW for law school, my total debt quickly topped $100,000, with interest rates locked in at 6.8 percent and 8.8 percent due to changes in federal law. Consolidation couldn’t reduce the interest rate, as federal law required my loan remain at the average of my existing interest rates.
But, because IBR payments may not cover accruing interest, after paying roughly $20,000 toward my loans in the past five years, I now owe more than I did when I graduated. Under IBR, any amounts owed after 25 years of repayment may be forgiven, but under current law that forgiveness will be taxable, leaving borrowers to make a large balloon payment to the IRS. Meanwhile, the federal government is projected to earn $127 billion off student loans in the next 10 years.
Multiply my story by the thousands upon thousands of borrowers in Wisconsin alone — and by our families, many of whom have helped us along the way. And multiply it by our kids, who will enter college while we are still trying to pay off our own debt. Then you start to have a picture of the impact of $1 trillion of student debt.