After a long election season, major news organizations have projected former Vice President Joe Biden as the winner of the 2020 presidential election. But what will this mean for your student loans?
First, an important note: We don’t know for sure about many of these policy plans. While it’s pretty much certain that Education Secretary Betsy DeVos will be replaced under a Biden administration, other plans — such as mass student loan forgiveness — are very much up in the air. A lot will also depend on whether the Democratic Party takes control of the Senate, an outcome that won’t be known until a pair of runoff elections in Georgia are resolved in January.
But with that in mind, here are nine things that could possibly become reality under a Joe Biden presidency:
1. Potentially $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 and workforce training
9. The departure of Betsy DeVos
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.
In March, Biden tweeted: “We should forgive a minimum of $10,000/person of federal student loans, as proposed by Senator Warren and colleagues. Young people and other student debt holders bore the brunt of the last crisis. It shouldn’t happen again.”
Note that this cancellation would only apply to federal student loans, not to private ones.
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.
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.
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.
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.
Possible good news 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.
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.
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 2020-21 year, Pell Grant amounts are currently set at $6,345.
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.
Unlike most of the other items on this list, the resignation of Education Secretary DeVos is a near certainty under a Biden presidency.
DeVos has 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.