Joe Biden and Student Loans: 8 Things That Might Change With Your College Debt

 April 30, 2021
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Joe Biden student loans

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Since taking office, President Joe Biden has made some moves to ease the burden of student loan debt and tuition costs, and has proposed some additional loan forgiveness measures. 

First, Biden extended the moratorium on student loans until Sept. 30, 2021. [Update: the student loan repayment freeze has been extended to May 1, 2021 — read our post for more details.] Thanks to this emergency forbearance, you don’t need to make payments or worry about interest accruing on your federal student loans. At the same time, the American Rescue Plan Act waived taxes on student loan forgiveness through 2025. 

In March, meanwhile, the Biden administration paved the way for 73,000 defrauded borrowers to receive a discharge of their student loans. And in April, Biden proposed legislation called the “American Families Plan,” which among other things, seeks to make community college free for all students. 

As for future higher education reform, we will have to stay tuned to see what proposals become reality. Based on what President Biden has said about student loan debt so far, here are eight things that have happened or could occur under his presidency:

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

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 planned 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. However, he did instruct Secretary of Education Miguel Cardona and his legal team to explore the possibility of canceling student loans via executive action in March. 

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

2. 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.

Senate Majority Leader Chuck Schumer (D-NY) and Sen. Elizabeth Warren (D-MA) have called for Biden to cancel $50,000 in student loans, but Biden has yet to voice support for this proposal. 

3. 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.

4. 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.

5. 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.

In April 2021, Biden announced the American Families Plan, in which he requested $109 billion for two years of free community college for all students. This plan will need to pass Congress before it is signed into law. 

6. 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.

7. Expanded Pell Grants

Biden plans to ratchet up the funding for Pell Grants. In the American Families Plan, Biden requested $80 billion in additional funding to increase Pell Grant awards by $1,400, according to Inside Higher Ed. 

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 were set at $6,345.

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

Biden also wants to increase federal funds to Historically Black Colleges and Universities and other minority-serving educational institutions.

In his American Families Plan, Biden asked for an additional $39 billion for HBCUs, tribal colleges and MSIs. This additional funding would provide two years of subsidized tuition for students whose families make less than $125,000 per year. 

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

Plus: Miguel Cardona replaces Betsy DeVos as Education secretary

As with most new administrations, the Biden White House has replaced the top leadership at the Department of Education, with Miguel Cardona, the former education commissioner for Connecticut, succeeding Betsy DeVos as Education secretary.

“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.

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