Bypass broken touch-ID after updating iPhone SE

Dear Apple community,

Since the latest software update 17.4.1, I have been fighting with the new Stolen Device Protection on my SE 2020.

My Touch ID has not been working properly for months, but it never bothered me because of Passcode. Now for information like my saved passwords, Touch ID is required, with no way to bypass it. I cannot turn off Stolen Device Protection or Touch ID or sign off the phone for a factory reset without fingerprint verification being required.

The Touch ID hardware can only be replaced by Apple, but the two-day trip to my nearest Apple Store would cost as much as new phone.

Things I have tried:

Rebooting/hard resetting the phone, but my fingerprint information remained on the phone.

Went through the Apple Support Chat

Backed up phone onto my MacBook to try to wipe the phone and restore, but iPhone cannot be wiped with Touch ID authorization.

Tried to log off phone, Touch ID required

Tried to delete fingerprints, Touch ID required.

Tried Face ID but the SE 2020 does not have it.

Tried turning off Stolen Device Protection, required Touch ID

Tried to turn off Passcode entirely but also required Touch ID.

I am at a loss. Does anyone know how to get past this problem?

My only alternative is getting a new phone. 😢