Student loans are, no doubt, a major topic in the national political conversation. Democratic Party presidential nominee Joe Biden is calling for federal loan forgiveness for borrowers making less than $125,000 per year. Meanwhile, the Trump administration has allowed an interest-free halt for most federal student loan repayment due to the coronavirus pandemic.
But what changes can borrowers expect to see based on the results of the Nov. 3, 2020 presidential election? In order to get an idea, we spoke with five student loan experts to gauge their predictions.
While all of them agreed that future policy could look very different depending on who wins, most don’t foresee major changes without congressional support.
Here’s a look at expectations …
- … If Pres. Donald Trump wins reelection
- … If Joe Biden wins the election
- … If there is a divided government
The Trump administration has made some student loan policy changes over the last 3.5 years, including efforts to limit student loan discharge through the borrower defense to repayment rule and to ease loan forgiveness for disabled veterans.
As for further student loan moves, the White House has called for streamlining the four income-driven repayment (IDR) plans currently on offer by combining them into a single plan, a move that might happen if Trump is reelected.
This new IDR plan, originally proposed during Trump’s 2016 campaign, would cap borrowers’ monthly repayment amount at 12.5% of their discretionary income. It would also decrease the repayment term for undergraduates to 15 years, but would increase the term for graduate students to 30 years.
President Trump has also sought, through his annual budget bills, to repeal the Public Service Loan Forgiveness Program (PSLF), though Congress hasn’t taken up this proposal.
But student loan lawyer Adam Minsky doesn’t expect any big borrower-focused changes in a second Trump term.
“If Trump wins reelection, we are unlikely to see significant student loan reforms, if we are basing predictions on what we have seen thus far in the last four years,” Minsky told Student Loan Hero. “No significant changes to student loan programs to benefit borrowers have been enacted in the last four years, other than the CARES Act, which provides only temporary relief.”
Michael Lux, attorney and founder of The Student Loan Sherpa, echoes these sentiments. “If Trump wins reelection, expect things to continue in the status quo,” he said. “To date, Trump has done very little to help manage the student loan crisis, and there isn’t any indication that a second term would be any different.”
Student loan lawyer Joshua Cohen is likewise pessimistic about what a Trump administration would mean for student loan borrowers, based on his view of its leadership at the Department of Education.
Current Education Secretary “Betsy DeVos is loath to help borrowers … expect nothing but worse,” he said, pointing to lawsuits against her over tax refund garnishments, PSLF implementation and other issues.
It makes sense that a change in president would result in big changes to policy, as agreed upon by the experts.
“If Biden wins and has a Democratic-majority Congress, we might see bolder reforms, including some form of widespread student loan forgiveness, which has the support of House Democrats, Senate Democrats and Biden himself, particularly in the wake of the pandemic and economic collapse,” said Minsky.
Biden has proposed mass student loan forgiveness for borrowers who make less than $125,000 per year, as well as providing immediate cancellation of $10,000 for all borrowers due to the COVID-19 pandemic.
Lux notes that “Biden has also proposed an [automatic] income-driven repayment plan that requires borrowers to pay 5% of their discretionary income towards their federal loans.”
“This could cut federal payments in half for borrowers, and it can be done regardless of who controls Congress,” he said.
Lux also believes a Biden presidency would restore the previous version of the borrower defense to repayment, as well as “clean up the Public Service Loan Forgiveness confusion” by streamlining the process.
Biden has also expressed his support for allowing bankruptcy discharge of student loans — a change from his previous position. (He had backed creating the current student loan bankruptcy rules in 2005.)
Regardless of the significant differences between the candidates, borrowers are unlikely to see much change if there is a divided government — whether the parties split control of Congress and the White House, or if Congress itself is divided.
“Borrowers should keep in mind that any changes may take a while to go into effect, since anything proposed would likely be amended, and there’s always a chance a divided Congress would create additional holdups,” said Kimberly Porter, finance expert and president of Microcredit Summit.
Some student loan changes can be made without Congress, via an executive order. But Minsky says that for Biden at least, it’s not certain this would be the likely method for reform.
“Elizabeth Warren and other consumer advocates have argued that a president can enact widespread [federal] student loan forgiveness … without Congressional action, under existing regulations,” Minsky said. “However, Biden, who is a long-time institutionalist, is unlikely to take such dramatic action without Congressional involvement.”
Instead, he said, borrowers can expect more subtle changes under a Biden presidency.
“If Biden wins the presidency and has a divided or Republican-majority Congress, we could see some modest reforms in areas that have bipartisan agreement, such as simplifying and improving income-driven repayment plans and restoring the Obama-era regulations for the borrower defense to repayment program,” said Minsky.
Minsky noted that Trump recently vetoed a bipartisan bill that would have restored some earlier borrower defense to repayment protections, so such a move could well happen if Biden becomes president, regardless of who runs Congress.
Cohen says that both Democrats and Republicans will need to find a middle ground before borrowers will see any reforms.
“There needs to be real partisanship here,” he said. “The message must always be how it helps a conservative and liberal agenda, how both sides win. If the story is always about returning money to the tax base, through motivating student loan payment plans, this could work.”
However, Mark Kantrowitz, financial aid expert and founder and VP of publishing for SavingforCollege.com, says that even with legislative support, he doesn’t personally expect mass student loan forgiveness anytime soon.
“It would be highly unlikely that Trump or Biden would cancel student debt as a result of the 2020 election,” said Kantrowitz. “However, a Biden administration could make the current paths to student loan forgiveness significantly easier.”
On the other hand, Lux expects the current period of emergency federal loan forbearance to continue past its deadline of Sept. 30, 2020, if only for political reasons.
“It would be shocking to see any politician be in favor of raising student loan interest rates a month before an election,” he said. “Borrowers may see 0% interest on their federal loans into 2021, regardless of who wins the election.”