Burdened by college debt, few graduates would expect to open their mail and see the words “LOAN FORGIVEN” stamped in bold red letters across the formal promissory note they had signed, pledging to pay their debts.
But that’s exactly what happened to more than two dozen former Owatonna area high school students.
“I’m still in shock,” said Abigail Bendorf, 23, who graduated in May from the University of Wisconsin Platteville with a degree in industrial engineering.
Bendorf, along with 30 others, was notified recently that debts they owed to the Gisle A. & Eva M. Johnson Loan Repayment Program had been erased.
The program was established in 1992 when local businessman Gisle Johnson and his wife left $1 million for an education endowment fund. The Johnsons operated Mercedes-Benz dealerships in the Twin Cities and Rochester.
When it was started, college-bound students received an award that was half scholarship-half loan to ensure that the money in the endowment would go further and help as many students as possible, said Kadie Davis of Scholarship America, which oversees the fund.
As the endowment grew, the fund’s managers dropped the loan component in 2018 and awarded scholarships that didn’t have to be repaid, she said.
This year, with a fund that’s pushed past the $2 million mark, the managers agreed to forgive $90,000 in debt owed by 31 students who graduated between 2010 and 2017. The loans range from $234 to $6,000 per student.
“I didn’t expect this,” said David Bulger, 30, who accumulated more than $200,000 in college debt during his undergraduate and medical school studies. “Most people would expect you to pay your loans.”
As Bulger began his medical residency earlier this year, he expected to start repaying the $3,000 loan he had received from the Johnson endowment. Much of his other debt is covered under an income-based loan repayment plan and could be erased in 10 years under a public service loan-forgiveness program.
The loan from the Johnson program was a small fraction of his college debt, but “it’s still quite a large amount of money” that he won’t have to repay, he said.
Likewise, said Luke Wanous, 24, who accumulated about $35,000 in debt by the time he graduated from college with a degree in business administration and communications and got an MBA in health care management.
Notified that he won’t have to pay the $6,000 loan from the Johnson fund brought a sense of relief and excitement. “Every dollar counts,” said Wanous, who is working as an “administrator in training” for the Good Samaritan Society in Waukon, Iowa.
“I’m right out of college in an entry-level position and you’re just trying to get by,” he said. “Once the loans kick in, it’s like a cloud hanging over your head. This forgiveness is such a relief.”
For Meagan Nowariak, 22, who graduated from Gustavus Adolphus College in St. Peter, Minn., in June, the “loan forgiven” notice for the $4,500 she owed immediately cut her current college debt in half.
With a biology major in hand, she’s working as a cardiovascular research associate at the Minneapolis Heart Institute but plans to start medical school next year.
“Having half my [current] loans forgiven is quite amazing,” Nowariak said. “This is a great weight off my shoulders.”
Medical school, which can cost from $40,000 to $80,000 a year, will quickly push her into more debt. “It’s definitely an investment,” she said.
Mounting college debt is squeezing many graduates.
“I’m looking at the numbers and how to pay it back fast enough and still pay the rent and groceries,” said Abigail Bendorf, who welcomed the news that the Johnson program was wiping out $4,000 in loans. She owes about $16,000 in other loans.
“No one in college or high school really explains what it will mean when you have to pay back your loans,” Bendorf said. “It can be confusing … and a little bit daunting. You want to do it right, because you don’t want to lose a bunch of money by not paying it back fast enough or missing deadlines.”
With $4,000 less debt, paying the rent and finally buying a car just got a tad easier.
“This is great,” she said.