Joe Biden’s Interesting Student Loan Plan: What it Means for You

Joe Biden’s student loan plan includes ‘free’ college tuition and loan forgiveness.

The Democratic nominee has been in the news recently talking about student loan relief. Coronavirus has had a crazy impact on many people, especially those with student loans, so people are obviously concerned about what the future holds.

Joe Biden has issued several statements on how he plans to solve the student loan dilemma, so let’s take a look at what he has to say.

Coronavirus relief

In regards to COVID-19 relief, Joe Biden says that all federal student loan borrowers should immediately get $10,000 in forgiveness.

This proposal hasn’t been granted, however President Trump did issue a memorandum that suspended all student loan payments and interest accrual until the end of 2020.

In late May, the Democratic nominee was interviewed by Stephen Colbert in order to explain his proposed solutions to the student loan crisis.

Cancel Student Loan Debt

Joe Biden has made it pretty clear that he wants to cancel your student loan debt. Whether he will be able to accomplish this or not is a different story.

Under his current proposed plan you will qualify for relief as follows:

  • If your income is less than $125,000
  • If you took out loans for an undergraduate program
  • If you went to a public university, college, or private HBCU
Student loans used towards a graduate degree would not be forgiven under Joe Biden’s proposed forgiveness program. Along with this, Biden does not go into much detail about how he plans to implement his plan.

Forgiveness Programs

The Democratic nominee plans to provide relief to borrowers who currently work in public service by introducing a new forgiveness program.

Biden’s new plan would have a dramatic impact for those who qualify. The new forgiveness plan would allow borrowers to cancel $10,000 of their loans for every year of public service employment. They would be eligible up to 5 years.

Public Service Loan Forgiveness is the current program available to teachers and government employees. This program requires borrowers to complete 120 consecutive payments in order to be eligible to have their remaining loans forgiven. 

Biden plans on making some adjustments to this existing program, including qualifying additional federal loans.

So, essentially under the proposed changes:

  • The current PSLF program would undergo some adjustments
  • Under the new forgiveness program up to $50,000 can be forgiven 
(Unfortunately over 98% of applicants don’t qualify)

Grab the Student Debt BluePrint Instead
Image from New York Federal Reserve (CNBC)

Changes to income driven repayment

There are currently four different types of income driven repayment plans:

  • Pay As You Earn (PAYE)
  • Income-Based Repayment (IBR)
  • Revised Pay As You Earn (REPAYE)
  • Income-Contingent Repayment (ICR)
Biden plans to introduce a new income driven repayment plan regarding federal loans. The new plan would have some slight modifications to the existing plan.

 

Heres how:

  • Forgiveness won’t be taxed
  • Only Undergraduate loans qualify
  • If you make less than $25,000 monthly payments would be $0
  • You would pay 5% of discretionary income (currently between 10-20%)
 

Free College

In addition to providing relief to current student loan borrowers, part of Joe Biden’s student loan plan is to make college free for students in the future.

  • Community college would be tuition-free for two years
  • If family income is under $125,000 tuition would be free (public college/university)
  • If you attend a HBCU or MSI Grants would cover two years of tuition
Under the proposed plan, you would still need to cover non-tuition costs (room and board)

You can make the argument that college isn’t really free (taxes) but this is Biden’s proposed plan.

The future is unpredictable

Joe Biden’s student loan plan is definitely interesting, but some people many not agree with his ideals.

Whether you are a Democrat, Republican, or neither, you should anticipate some changes in the future.  

Student loan debt is a major problem in the United States. It has grown from $830 Billion in 2010 to over $1.6 Trillion in 2020.

In these challenging times, it is completely normal to be anxious about the future. With that being said, the most important thing to do is focus on what you can control.

No one wants student loan debt to keep them in a chokehold for their entire lives. The quickest way to escape the treacherous traps of the financial world is to educate yourself and then put in the work.

If you are still unsure where to start grab the Student Debt Blueprint and change your life. (Click the Picture Below)

(This is the Democratic Party’s plan for student loan forgiveness. You can heck out the Republican vision here)

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