Joe Biden and Student Loans: 10 Things That Might Change With Your College Debt

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Update: Since this report was originally published, President Biden has been sworn in and has extended the student loan moratorium (see point #2 below) until Sept. 30, 2021. Other plans listed here could soon become reality as well, though probably not all will. Stay tuned to Student Loan Hero for the latest on U.S. student loan policy.

Once Joe Biden is sworn in as the next U.S. president on Jan. 20, the Democratic Party will hold the balance of power in the White House and both houses of Congress. This change in leadership could result in significant changes for your student loans.

Based on what President-elect Biden has said about student loan debt so far, here are 10 things that could possibly become reality under his presidency:

  1. Proposed $10,000 in federal student loan forgiveness
  2. Extension of the moratorium on federal student loans
  3. Full forgiveness for certain public college graduates
  4. Annual payouts for approved Public Service Loan Forgiveness applicants
  5. Possibly lower payments on income-driven plans
  6. Free community college for all students
  7. Tuition-free public colleges, depending on income
  8. Expanded Pell Grants
  9. Increased investment in HBCUs, other schools and workforce training
  10. Miguel Cardona replacing Betsy DeVos as Education secretary

1. Proposed $10,000 in federal student loan forgiveness

During his bid for the presidency, Biden voiced support for the immediate cancellation of $10,000 or more in federal student loans per borrower, as part of a response to the coronavirus pandemic proposed by Sen. Elizabeth Warren and others.

On Jan. 8, a Biden aide told reporters that the incoming president plans to ask Congress to immediately cancel $10,000 in federal student debt for all borrowers in order to ease the financial strain people are experiencing.

While some have called for Biden to cancel student loan debt via executive action, it seems that Biden plans to work with Congress to get this relief passed rather than acting unilaterally.

Note that this cancellation would only apply to federal student loans, not to private ones.

2. Extension of the moratorium on federal student loans

In response to the COVID-19 crisis, the government paused payments at 0% interest on federal student loans. Not only do borrowers not have to pay during this time, but they also don’t have to worry about interest accruing on their debt.

This moratorium was initially set to expire on Sep. 30, 2020, but it was extended twice by the Trump administration —first until Dec. 31, 2020, and again until Jan. 31, 2021. A member of Biden’s transition team has said that Biden also plans to extend the moratorium on his first day in office, although it’s unclear for how long payments would be paused.

3. Full forgiveness for certain public college graduates

While Biden supports partial loan forgiveness for all borrowers, he has also proposed full student loan forgiveness for those who matriculated from undergraduate programs at public colleges and universities who make less than $125,000 per year.

Unfortunately, graduates of private colleges would not be eligible for this relief. Private student loans also wouldn’t qualify. But if you’re a graduate of a public college with federal student loan debt, you could potentially see it all wiped away under Biden’s presidency.

4. Annual payouts for approved Public Service Loan Forgiveness applicants

Biden has also urged reform of the Public Service Loan Forgiveness program. Currently, PSLF offers total federal student loan forgiveness after 10 years of working in public service (which translates to 120 qualifying payments).

Under Biden’s proposal, eligible borrowers would receive $10,000 in loan forgiveness annually for up to five years. Instead of working for 10 years before finding out for sure if they qualify, borrowers could be approved after just one.

However, with the five-year cap on payouts, forgiveness from PSLF might be limited to $50,000, meaning borrowers with higher debt loads would still have loans to pay off after five years in this program.

5. Possibly lower payments on income-driven plans

There are currently four income-driven repayment plans for federal student loans, all of which adjust your monthly payments as a percentage of your discretionary income.

Biden has talked about simplifying these plans and capping payments at 5% of disposable income for borrowers who make more than $25,000 (currently, the lowest cap is 10%). Borrowers who make less than $25,000 wouldn’t have to pay anything.

Along with securing more affordable payments, you could also get the remainder of your balance forgiven after 20 years of repayment — current plans offer forgiveness after 20 or 25 years, depending on the borrower — and any forgiven amount would no longer be treated as taxable income.

6. Free community college for all students

If you’re a prospective college student or the parent of one, you or your child might soon be able to earn an associate’s degree for free. Biden has talked about making community college free for all students, regardless of income.

7. Tuition-free public colleges, depending on income

There may be good news coming for students who are interested in a four-year public college or university: Biden has said he supports making all such schools tuition-free for students whose families make less than $125,000 a year.

On Dec. 23, 2020, Biden tweeted: “In the 21st century, twelve years of school isn’t enough. That’s why under the Biden-Harris plan, community college will be free — and public colleges and universities will be tuition-free for families earning less than $125,000 a year.”

Note that tuition-free probably doesn’t mean a free ride — chances are you’d still have to cover housing, food and other expenses that make up your cost of attendance.

8. Expanded Pell Grants

As a candidate, Biden also discussed increasing the funding for Pell Grants.

Pell Grants are a need-based form of financial aid for students with a relatively low Estimated Family Contribution (EFC). For the 2020-2021 year, Pell Grant amounts are currently set at $6,345.

9. Increased investment in HBCUs, other schools and workforce training

Biden has also discussed increasing federal funds to Historically Black Colleges and Universities and other minority-serving educational institutions.

Biden has also supported expanding non-college workforce training programs, such as apprenticeships.

10. Miguel Cardona replacing Betsy DeVos as Education secretary

While the departure of former Education Secretary DeVos would have been a near certainty under a Biden presidency, DeVos submitted an early resignation on Jan. 7 following the violent riots in the U.S. Capitol.

DeVos had attracted controversy and was the subject of several lawsuits during her tenure. One particularly hot-button issue involved the borrower defense to repayment rule, which is supposed to cancel student loans for defrauded students. The legal wrangling resulted in a settlement, forcing the Department of Education to work through a backlog of claims.

Before resigning, DeVos also wrote a letter urging Congress to reject large-scale student loan forgiveness for borrowers.

In her place, Biden has nominated Miguel Cardona, the education commissioner for the state of Connecticut, who will need to be confirmed by the U.S. Senate to take up the post.

“Dr. Cardona has a proven track record as an innovative leader who will fight for all students, and for a better, fairer, more successful education system,” Biden was quoted as saying by Inside Higher Ed.

“He will also strive to eliminate long-standing inequities and close racial and socioeconomic opportunity gaps — and expand access to community colleges, training and public four-year colleges and universities to improve student success and grow a stronger, more prosperous and more inclusive middle class.”

Cardona worked as a public school teacher, principal and assistant superintendent before becoming head of Connecticut’s K-12 schools.

“The passion I have for public education stems from my belief that it is the best lever for economic success and prosperity in Connecticut and the belief that public education is still the great equalizer. It was for me,” Inside Higher Ed cited Cardona as saying at his confirmation hearing for Connecticut education commissioner.

Published in News & Policy