Your student loans may look a lot 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 articulated during his presidential campaign, Biden would make several changes to student loan repayment, student loan forgiveness, the cost of college, and even would cancel student loan debt.
Here are 5 ways your student loans could change during Biden’s presidency:
1. Your student loans may be cancelled
This is a big one. However, don’t expect all your student loan debt to be cancelled. As a candidate, Biden proposed cancelling up to $10,000 of student loan debt for each borrower. Importantly, this would include federal student loans, not private student loans.
2. You may get student loan forgiveness
If you attend a two-year or four-year public college or university, and earn less than $125,000 per year, you may get student loan forgiveness. Importantly, this would only apply to student loans from college. So, if you have graduate school student loans, then you would not get student loan forgiveness under this plan.
3. You may need to borrow fewer student loans
It’s possible you may borrow fewer student loans. Why? Biden campaigned on a “free college” plan that Sen. Bernie Sanders (I-VT) and Sen. Elizabeth Warren (D-MA) promoted as presidential candidates. Under the proposal, Biden could make two-year and four-year public colleges tuition-free. So, if you qualify, the tuition portion of your college costs may be covered under this proposal. This means that you would conceivably borrow fewer student loans to cover non-tuition expenses such as room and board.
4. You could pay less under an income-driven repayment plan
Biden wants to revamp income-driven repayment plans. Currently, there are four income-driven repayment plans: Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE) and Income-Contingent Repayment (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. Moreover, enrollment in income-driven repayment plans would become automatic, whereas currently you have to enroll. Student loan forgiveness also would become automatic after 20 years, and you would not owe income tax on the amount forgiven.
5. You could get Public Service Loan Forgiveness sooner
Biden wants to get your public service loan forgiveness sooner. Currently, it takes 120 monthly payments, or 10 years, to get public service loan forgiveness. Biden would cut the time in half: five years to get $50,000 in student loan forgiveness, which is $10,000 per year. While the time would be sooner, it’s unclear if borrowers could receive more than $50,000 of 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 won’t be the Secretary of Education
In addition to these five changes, one sixth change is certain: Betsy DeVos will no longer be the U.S. Secretary of Education. DeVos, who served in this position under President Donald Trump, will not be Education Secretary starting January 20, 2021, the day Biden is inaugurated. There are several potential replacements, including Warren, who has promoted issues like student loan forgiveness, tuition-free college and a plan to cancel student loan debt.
Pay off student loans
Want to pay off student loans faster? Here are good places to start, all of which have no fees: