5 Ways Your Student Loans May Change Under President Biden
Your student loans may look very different under President Joe Biden.
Here’s what you need to know.
President-elect Biden has a clear plan for your student loans. As he explained during his presidential campaign, Biden would make several changes to student loan repayment, student loan cancellation, cost of college education and even student loan debt cancellation.
Here are 5 ways your student loans might change during Biden’s presidency:
1. Your student loans can be canceled
It’s a big one. However, don’t expect all of your student loan debt to be canceled. As a candidate, Biden offered to write off up to $ 10,000 in student loan debt for each borrower. It is important to note that this would include Federal Student Loans, not private student loans.
2. You can get a student loan discount
If you attend a public college or university for two or four years and earn less than $ 125,000 a year, you can get your student loan forgiven. It is important to note that this would only apply to college student loans. So if you have student loans for graduate studies, you will not get student loan discount under this plan.
3. You may need to borrow less student loans
You may be borrowing less on student loans. Why? Biden campaigned on a “free college” plan that Senators Bernie Sanders (I-VT) and Elizabeth Warren (D-MA) promoted as presidential candidates. According to the proposal, Biden could make two- and four-year public colleges free. So, if you are eligible, the tuition portion of your university fees may be covered by this proposal. This means that you would likely borrow fewer student loans to cover expenses other than tuition, such as room and board.
4. You could pay less under an income-based repayment plan
Biden wants to revamp income-driven repayment plans. Currently, there are four income-based repayment plans: Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Go you earn (REPAYED) and reimbursement based on income (ICR). These plans require 10-20% of your discretionary income. Biden would limit student loan repayment for federal student loans to no more than 5% of discretionary income. In addition, enrollment in income-based repayment plans would become automatic, whereas currently you must enroll. The student loan exemption would also become automatic after 20 years, and you would not be liable for income tax on the exempt amount.
5. You could get a civil service loan forgiveness sooner
Biden wants your utility loan canceled sooner. Currently, it takes 120 monthly payments, or 10 years, to obtain a public service loan discount. Biden would cut the time in half: five years to get $ 50,000 student loan cancellation, or $ 10,000 per year. Although the timing is earlier, it is not clear whether borrowers could receive more than $ 50,000 in student loan forgiveness. For example, currently there is no cap on the amount of federal student loan forgiveness you can receive under the public service loan forgiveness program.
Betsy DeVos will not be the Secretary of Education
In addition to these five changes, a sixth change is certain: Betsy DeVos will no longer be the US Secretary of Education. DeVos, who held the post under President Donald Trump, will not be Secretary of Education from January 20, 2021, the day Biden was inaugurated. There are several potential replacements, including Warren, who has promoted issues such as student loan cancellation, college tuition free, and a plan to write off student loan debt.
Pay off student loans
Want to pay off your student loans faster? Here are some good starting points, all free: