Debt Without a Degree: Is Loan Forgiveness Just a Band-Aid?

Marissa Ziefle was prepared for college. Her college-prep high school drilled academic excellence into students. When she started at UWM, college felt even easier than high school. But as she progressed, Ziefle grappled with a question that millions of students ask themselves each semester:

What do I want to do with my life?

What followed was a string of major switches and, eventually, withdrawal from college altogether. Now, she has $30,000 in student loan debt and no degree. 

Ziefle, 23, felt pressure to go to college. She felt like that was what everyone else was doing, and she figured student loans were the way to get there.

“I didn’t really realize how much money I was taking out each year,” said Ziefle. “I probably wouldn’t have gone right away into a four-year program; I would have taken a year off and thought about it.”

Every year, millions of Americans enroll in four-year public universities and take out loans to cover thousands of dollars of tuition. In Spring 2022, about 7.3 million students enrolled in a four-year public institution, according to the National Student Clearinghouse Research Center. Some students, however, leave with all of the debt and no degree.

Ziefle isn’t sure if she will go back to school. She doesn’t want to enroll if her heart isn’t in it, and with loan payments due, she needs to work.  

“Either I need to work to pay for school or be in school full time, and then you’re losing money,” she said. “I’d rather just make money and start paying off my loans a little bit and make up my mind.”

Ziefle is one of the millions of undergraduate students in America who drop out of college each year. According to the National Student Clearinghouse Research Center, 24.9% of full-time students dropped out in 2020-21. At UW-Milwaukee, only 49% of students graduate within eight years; that’s 8% lower than the national average, according to the United States Department of Education.

Schools Focus on Retention

Student retention is an issue that has plagued UWM campus administrators for years, and the university has launched numerous projects to counteract these low rates. UWM Pathway Advisor Sarah Terry says that’s just what her department was created for in recent years.

“We really try to help connect them with the campus community and the Milwaukee community as a whole and help them make a smooth transition into college — an informed transition,” said Terry.

Though fairly new, the UWM Pathway Advising Office, just across the hall from the Financial Aid Office, guides students into fields that suite them. They help connect mostly freshman and first-generation students to academic support, financial aid and organizations for in-person experiences.

The office formed in response to undecided students feeling overwhelmed and unsure of their options. Twenty-four percent of UWM students stop attending after their freshman year, according to the United States Department of Education.

Sometimes, students enroll in college because it seems like the right thing to do. But not everyone has a plan.

“Different students have different needs and different goals,” said Terry. “We do our best to support them in that process.”

Finances are a huge item on the minds of students, and Pathway works closely with the financial aid office to counteract these concerns. Terry says communication is key.

“We can offer all the best services and all the best opportunities and initiatives in the world, but how do we effectively communicate those things to students when there is so much information to be shared?” she said.  

The Pathway Advising Office created a scholarship portal find the best fit for them. However, some students don’t see financial aid as an opportunity, but a burden.

The Cost of Uncertainty

Former UW-Milwaukee student Talia Lackershire, 21, never saw student loans as an option; her parents didn’t let her. She understood what loans meant for her future after selling cars in high school.

“I know about car loans better than I do about student loans,” she said. “You never know what’s going to happen, and if money’s tight, you still have to pay your student loans.”

According to a 2017 Pew Research Center study, only 32% of young college graduates with student loans say they are living comfortably, compared with 51% of college graduates of a similar age without outstanding loans.

Instead, Lackershire worked to pay her way through school. In fall 2019, she started her freshman year, paying $14,000 out of pocket as an undecided student. Mere weeks into spring 2020, she dropped out. She still had to pay $4,000.

“I felt like I had to go to a four-year school to be successful, even though I didn’t know what I wanted to do,” she said. “I felt like I kind of wasted a little bit of time.”

Afterwards, Lackershire started at the Aveda Institute of Beauty and Wellness. She always knew she liked cosmetology, but never saw it as an option.

“I had the impression that you don’t make much money being a hairdresser, which is completely wrong,” said Lackershire. “It was just more of educating myself.”

Lackershire wishes she knew about the expenses that come with being unsure in college. Her counselors told her about deadlines to drop classes, but she still had no idea she’d owe money for the three weeks she went to school.

Financial Aid Confusion

Although she escaped student loans, Lackershire is an example of the ways college can be financially draining no matter how much you prepare. However, UWM Student Financial Service Center Director Sue Minzlaff says students have options.

“It shouldn’t be this hard,” said Minzlaff. “There’s so much out there. It just seems more and more people don’t do anything until they see that bill.”

In 2019, UWM retention rates were at 75.2%, which is 7.2% less than the national rates, according to the UW-System Accountability Dashboard.

If students are looking to drop, this means they haven’t earned their financial aid, Minzlaff says. According to her reports for the fall 2022 semester, as of October, over 300 students in total at UWM have dropped from all of their classes.

“I wish our PAWS system even had some type of, ‘if you’re going to drop on your classes, wait,’ because for some of those students, if you dropped today, it doesn’t mean that your bill goes away,” said Minzlaff.

Heavy Loan Burden at UWM

UWM has a debt problem.

 A study on the 2017-2018 school year by the UW-School System found UWM students have the highest average loan debt among borrowers in the UW-System. Seventy-nine percent of UWM students graduated with debt that year.

Minzlaff says that UWM has the highest number of Pell Grant recipients, which is used as a gauge for the neediest students. Efforts are limited by state funding; we need more grant money that isn’t based on academic merit.

“Honestly, for years and years, we share that information up the food chain,” said Minzlaff. “There’s a lot of students that have a 2.5 to 3.5 GPA that are doing what they need to do, and could use a little boost in some free money.”

The numbers of borrowers at UWM are high, with 53% of UWM students receiving federal student loans. The median total debt after graduation is $23,948, according to the U.S Department of Education.

Minzlaff feels that UWM does a lot to help students counteract the debt crisis. One effort, the Student Financial Service Center, isn’t up and running yet. They’re a collaborative effort between the Financial Aid Office, Bursar Office, and Scholarship Department. They are working on outreach to educate students on financial literacy.

What Can Students Do?

Minzlaff highlights the importance of being realistic about what you take out compared to what you’ll get. Whatever a student is eligible for, they have to certify the loan to be dispersed.

“There’s no real reason a student should go into default,” said Minzlaff. “There’s so many options that if they talk to their loan servicer, it would be forbearance or signing up for an income-driven repayment plan.”

Tim Opgenorth, director of financial aid at UWM, mirrors Minzlaff’s advice. For students looking to enroll, he stresses the importance of looking at the cost of college.

“It’s not just for one year,” said Opgenorth. “I talk to students and parents who look at the cost and say it’s going to be a struggle for year one, and well, I’ll be the first to say it, if you struggle year one then you’ll struggle year two, three, four, five.”

Enrollment at UWM has been on a steady decline since 2018. In 2021, the university saw its lowest numbers yet, with a 12.5% decline in students, according to the UW-System.

Their recent efforts have focused on recruiting students. Comparing the high debt ratio to retention rates, a question arises: Is it ethical to recruit students who may not understand the debt they are taking on?

“I sleep fine at night,” Minzlaff said. “I still feel that UWM is a great choice for students.”

Living with the aftermath of student debt can be debilitating. According to the U.S. Department of Education, 15% of UWM students defer on their student loans, 13% are in forbearance and 6% default.

“It makes me so sad to think about it. I have conversations with my parents about my debt and I start crying. It’s difficult to fathom that at 18 years old, I made that decision.”

Anna Kretlow

Former private school and UWM student Anna Kretlow, 21, is living with the fallout of student loans. In fall 2019, she enrolled in a private college in Iowa but realized it was not for her. After leaving, Kretlow tried an online semester at UWM, before dropping out altogether in 2020.

Currently, Kretlow lives under the weight of $27,000 in student loan debt.

In AP classes in high school, Kretlow felt the work she put into her academics wouldn’t be worth it if she didn’t go to college.

“I wish I knew that it’s okay not to be sure,” said Kretlow. “There are other fields and careers that don’t involve a college degree; they should be proud of that too.”

Planning for Payments

Michael Madouse, a UWM Financial Aid Advisor, says most students he talks to are unsure of where they are in the borrowing process.

“We don’t get a lot of people that sit down and say, ‘I want to go through all my repayment plan options that are out there,’” said Madouse. “We do get a lot of students when they are graduating who stop in and do that. With the pandemic, nobody’s had any payments due, so it’s been a few years since I’ve had somebody sit down and just do that.”

Madouse directs students to the Federal Student Aid website to stay updated on their loans and repayment options. He cited the National Association of Student Financial Aid Administrators and their stance on the recent loan forgiveness plan.

“Loan forgiveness is great, but what about just fixing the issue that people can’t afford school?” Madouse said.