Joe Biden’s Plan For Your Student Loans
Updated On October 12, 2021
Editorial Note: This content is based solely on the author's opinions and is not provided, approved, endorsed or reviewed by any financial institution or partner.
What could Joe Biden’s plan mean for your student loans? Former Vice President Joe Biden has a detailed plan for student loans, including tuition-free college and student loan forgiveness. Whether Biden or Donald Trump wins the White House, the election results could have a significant impact on what happens to your student loans.
Student Loan Forgiveness
Biden would revise the current Public Service Loan Forgiveness program as follows:
- $50,000 of student loan forgiveness: For each year that you work for a public service or non-profit employer, you could receive $10,000 of student loan forgiveness, for a total of five years.
- Include more federal student loans: Biden would expand the eligible types of federal student loans to include FFELP Loans, for example, so that more borrowers could qualify. Currently, FFELP loans do not count for public service loan forgiveness.
- Forgive student loans faster: The current Public Service Loan Forgiveness program requires 10 years of full-time student loan payments. Under Biden’s plan, you can receive half of your student loan forgiveness after five years.
Cancel student loan debt
Biden has several proposals to cancel student loan debt, but there are limits based on income, school attended and degree:
- Cancel student loans: Biden doesn’t support outright student loan forgiveness. However, Biden would cancel student loan debt in certain circumstances.
- Public colleges: If you have federal student loans from a public college or university, you could receive student loan forgiveness.
- HBCUs and MSIs: If you have student loan debt from a Historically Black College and University (HBCU) or a Minority-Serving Institution (MSI), then you also could receive student loan forgiveness.
- Undergraduate only: Biden’s student loan plan only applies to undergraduate tuition.
- $125,000 of income:Biden’s plan would phase out at $125,000 of income, so only student loan borrowers with income below this level would be eligible.
Biden would make certain colleges and universities tuition-free for students:
- Public colleges: If you attend a four-year public college or university, your tuition would be free.
- Community colleges: If you attend a two-year community college, your tuition would be free. You may also qualify for free tuition at a trade school or similar career program.
- HBCU’s and MSI’s: You could receive up to two years of free tuition at HBCU’s and MSI’s as well as tribal colleges.
- $125,000 Income: To qualify for tuition-free college, your family must earn less than $125,000 annually.
- Other college expenses: Even if tuition-free colleges, you would be financially responsible for all other costs such as room and board as well as living costs.
Income-Driven Repayment Plans
Biden supports the current income-driven repayment plans that are available to federal student loan borrowers. However, he would improve income-driven repayment plans as follows:
- 5% of discretionary income: Biden would limit income-driven repayment plans to 5% of discretionary income. Current income-driven repayment plans start at 10-20% of discretionary income.
- Undergraduate student loans: Biden would make income-driven repayment plans apply to undergraduate student loans only. That means if you have federal student loans for your graduate school, those student loans wouldn’t be eligible.
- Less than $25,000 income: If you earn less than $25,000 per year, your monthly student loan payments for your federal student loans would be $0.
- Automatic enrollment: Currently, you have to enroll in income-driven repayment plans. Under Biden’s plan, you would be automatically enrolled in an income-driven repayment plan.
- Tax-Free Student Loan Forgiveness: Currently, if you receive student loan forgiveness through an income-driven repayment plan, you may owe income taxes on the amount forgiven. Under Biden’s plan, student loan forgiveness would not be taxed.
Biden’s plan: Summary
Biden’s plan targets student loan forgiveness, tuition-free college and income-driven repayment plans. If Biden is elected president, Congress would still need to approve most, if not all, of these proposals to effect change.