UWM puts $5.1 million in federal stimulus funds toward paying off debt for 2,000 students

The University of Wisconsin-Milwaukee became the latest college to wipe out millions of dollars in student bills Friday, leveraging federal COVID-19 stimulus funds to pay off outstanding student debt incurred during the pandemic.

UWM put $5.1 million from the latest round of stimulus money — awarded through the American Rescue Plan Act — to cover balances for about 2,000 students who owed money directly to the university. The average bill forgiven was $2,714, in most cases for tuition or housing.

The forgiveness applies to costs incurred by students during the 2020-2021 school year. It does not include private or government loans.

Students do not need to currently be enrolled to receive the funds; 100 graduates will received them. The money is available regardless of citizenship status and the exhaustion of other forms of financial aid. Students do not need to apply; the balances will be paid automatically. 

Kay Eilers, associate vice chancellor of enrollment management, said the amount of outstanding debt covered was illustrative of the financial pressures UWM students faced during the past year.

"We've always known that our student population has a lot of financial need," she said. "It also shows me how hard-hit our students were during the pandemic. We know we don't have enough funding for our students and we always are trying to find other avenues and accessing the institutional portion of the (stimulus) funds was a no-brainer for us to make sure that we're using these funds to support our students."

Though retention rates are not yet available from the past school year, Eilers said UWM has seen more students not able to re-enroll because of finances. UWM's overall enrollment, on all three campuses, is down 5% this coming year, she said.

The hope is the funding will help students who dropped out of school come back, although returning to school is not a requirement to receive the forgiveness. 

UWM also will make $500,000 available specifically for continuing students who paid off their bills despite facing other financial hardship. Applications for those grants are due Sept. 1.

Colleges received three rounds of stimulus funding during the pandemic, each with a pot of money earmarked for students and one for institutional use. The latest funding round allowed colleges to use the institutional portion of the funding to cover lost revenue in this way, essentially making more money available for students without dipping into the student aid.

UWM has $25 million in emergency grants still available to UWM students who need them: the deadline to apply is Sept. 13. Some students may be eligible for both the debt forgiveness and the emergency grants.

At least two other Wisconsin colleges have used the same strategy. Milwaukee Area Technical College and Madison Area Technical College combined paid off nearly $10 million in student bills this summer.

Each of these colleges has one thing in common; they serve a high proportion of students from low-income backgrounds, among the hardest hit by the economic stresses brought on by the pandemic. One in three UWM students meets the income threshold to receive federal Pell grants, which are reserved for low-income households, and 78% of students receive some form of financial aid.

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UWM also serves a high number of first-generation students. At 35% of the student body, these students are known to need more support and guidance while navigating the various hurdles that come with college attendance.

In addition to the $30 million going to students through the American Rescue Plan Act, UWM doled out $8.5 million in emergency grants to 8,909 students through the first round of stimulus funding and $8.5 million to 8,883 students in the second round.

For some, the emergency grant money was the difference between whether or not students could pay their rent or buy food.

Early data shows students who got the first round of stimulus funding at UWM were more likely to stick with their education. Before the pandemic, UWM also had its own emergency grants for students who were facing hardship and retention grants that are aimed at students who are at risk of dropping out.

"We can see small amounts of money making a really big difference," Eilers said. "Let's get that money to students quickly, easily, so that they can focus on what they actually need to focus on."

UWM students can apply for an emergency grant at: https://uwm.edu/deanofstudents/assistance/heerfgrant/

Contact Devi Shastri at 414-224-2193 or DAShastri@jrn.com. Follow her on Twitter at @DeviShastri.