By LaKeshia N. Myers
“Star light, star bright, First star I see tonight; I wish I may, I wish I might Have the wish I wish tonight.”~Traditional Folk Tune.
Wishing. Hoping. Praying. That is what many millennials and Gen Xers have been doing for years when it comes to student loan debt relief. Some wished for a magic wand to relieve debt altogether, while most hoped-for lower interest rates, equity in the Public Service Loan Forgiveness Program, and some type of one-time debt relief. Others, like me, who have earned graduate and professional degrees (which are often accompanied by hefty loan payments) were just glad to see anything happen at all.
Seemingly our prayers had been answered when President Biden revamped the entire loan forgiveness department at the Department of Education—streamlining the PSLF program and granting loan forgiveness up to $20,000. Then we realized, that a few states, namely Wisconsin, has a tax law that would tax the forgiven loans. You read that correctly—Wisconsin ain’t trying to grant its people a tax credit to offset the federal student loans forgiven.
According to the Milwaukee Journal-Sentinel, “on the federal level, student debt relief is tax exempt until 2026 because of a provision in the American Rescue Plan Act. But unlike more than 40 other states, Wisconsin’s state tax code differs from the federal government’s when it comes to student loan forgiveness. This means borrowers eligible for the Biden administration’s student debt relief may be on the hook for hundreds of dollars in additional state income taxes unless state law changes” (Meyerhofer, 2022).
Even with Wisconsin’s projected six-billion-dollar budget surplus, GOP leaders have been mum about whether or not they would support using some of the surplus to create a tax credit for individuals covered under the student loan forgiveness program. Further perplexing is the fact that if the Republican-controlled Legislature declines to act, there’s a major hurdle to collect the tax: The state Department of Revenue has no way of knowing who has had their student debt forgiven and owes money to the state. Which (in my mind) should behoove them to act swiftly upon their return to session and create an adequate tax credit.
I personally am ready and willing to support a bill that would provide full relief to those impacted. Not only would it help the majority of Wisconsinites, it may prove to be a fortuitous bipartisan peace offering; something desperately needed after a particularly harsh fall election season.
So, Star light, star bright, First star I see tonight; I wish I may, I wish I might pray the GOP has common sense about student loan relief tonight.