Joe Biden—former Vice President during the Obama Administration and current Democratic nominee for the 2020 presidential election—has made student loan reform a major component of his campaign platform.
Along with Senator and Democratic Vice Presidential candidate Kamala Harris, Biden plans to enact a comprehensive $750 billion student loan plan. His goal is to address the current student loan crisis by providing relief measures to borrowers and reducing the cost of college moving forward.
The Biden Plan for Education Beyond High School
Biden’s plan, entitled The Biden Plan for Education Beyond High School, seeks to create several new policies. You can review the whole plan on his campaign website, but we’ll focus on the policies he hopes to enact regarding student loans and higher education affordability:
1. Cancel Student Debt
His plan calls for the cancellation of ALL federal student debt for borrowers who meet all the following criteria
- You attended a public college, a public university, a private HBCU (Historically Black College and University), a private MSI (Minority-Serving Institution)
- You used the loans for your undergraduate tuition
- You earn less than $125,000
2. Coronavirus Student Debt Relief
Biden supports providing federal student loan borrowers with $10,000 of loan forgiveness as a form of COVID-19 relief.
2. Revise the Income-Driven Repayment System
Biden’s calling for the simplification of the income-driven repayment plans offered by the Department of Education. His new income-driven repayment plan would operate like this:
- All federal student loan borrowers are automatically enrolled
- No monthly payments if you earn less than $25,000 per year
- Borrowers earning more than $25,000 per year would pay only 5% of their discretionary income toward federal student loan payments
- Complete forgiveness of your remaining federal student loan balance after 20 years
- You won’t have to pay income taxes on the forgiven amount
3. Rework the Public Service Loan Forgiveness Program
The current Public Service Loan Forgiveness (PSLF) program provides full forgiveness of all qualifying federal student loans in exchange for working full-time for ten years for a qualifying public service employer and making 120 qualifying payments.
Biden plans to create a new PSLF program and to pass legislation proposed in 2019 that would reform the current program.
The What You Can Do for Your Country Act of 2019 Biden plans to enact would reform PSLF by:
- Allowing all federal loans to qualify
- Allowing all federal repayment plans to qualify
- Requiring the ED to provide clearer info and guidance to all public servants
- Providing partial forgiveness after five years of service
- Simplifying the application and certification process
Biden’s new plan for public service loan forgiveness would provide qualifying public service workers with $10,000 in student loan forgiveness per year for up to five years. That would mean $50,000 worth of forgiveness in just five years. Borrowers who work in schools, government, and non-profit settings would automatically be enrolled in the program.
4. Make it Easier to Discharge Student Loans in Bankruptcy
Discharging your student loans during bankruptcy is possible, but it’s certainly not easy or a guarantee. Biden wants to change that by enacting a 2015 law that was proposed by the Obama-Biden administration but never became law. The law would allow student loans to be discharged more easily during bankruptcy.
5. Provide More Oversight to For-Profit Colleges
Biden plans to continue work started by the Obama-Biden administration by reenacting the administration’s Borrower’s Defense Rule. This rule would forgive the debt of borrowers whose colleges used illegal or deceptive tactics to get them to borrow money for attendance.
In addition, Biden would require all for-profit colleges to prove their value to the Department of Education before being allowed to receive federal aid dollars. He would also eliminate a 90/10 loophole, which incentivizes for-profit colleges to enroll veterans and military members in low-quality programs.
6. Hold Private Lenders Accountable
Biden’s plans to hold private lenders accountable by empowering the Consumer Financial Protection Bureau to take action against any private student loan lenders who mislead students about their repayment options. This includes lenders that fail to accommodate borrowers who are undergoing temporary financial hardship.
7. Make College Free
Joe Biden’s plans for student debt relief extend just beyond measures to help current borrowers. He’s also planning to make college more affordable to increase accessibility and limit future student borrowing.
Community College & Training Programs
Biden wants to make two years of community college or a high-quality training program free for all adults—not just recent graduates. The plan includes adults who would only attend part-time and DREAMers. To fund the plan, the federal government would contribute 75% of the cost, and states would cover the remaining 25%.
Public Colleges & Universities
Biden will also adopt a proposal described in Senator Bernie Sander’s and Congresswoman Pramila Jayapal’s College for All Act of 2017. We cover the entire act here.
The initiative would make tuition at all public colleges and universities free for families who earn less than $125,000 per year. It’s predicted that the move would help 80% of families.
8. Increase Pell Grant Awards
Pell grants used to cover 70 to 80 percent of costs for a four-year college degree from a public college or university. Today, they only cover 28% percent of costs. Biden plans to double the maximum value of a Pell grant to increase the grant’s value relative to the rising cost of college.
Biden would also ensure that formerly incarcerated individuals, DREAMers, and more middle-class Americans qualify for Pell grants.
9. Invest in Historically Underfunded Colleges & Universities
His plan would provide $70+ billion in funding to increase the affordability of and quality of the programs offered by minority-serving institutions (MSIs). These MSIs include:
- Historically Black Universities and Colleges (HBCUs)
- Tribal Colleges And Universities (TCUs), Hispanic-serving Institutions (HSIs)
- Asian American And Native American Pacific Islander-serving Institutions (AANAPISIs)
- Alaska Native-serving Institutions and Native Hawaiian-serving Institutions (ANNHs)
- Predominantly Black Institutions (PBIs)
- Native American-serving Nontribal Institutions (NASNTIs)
Biden’s website explains that MSIs disproportionately educate first-generation students, low-income students, and students of color and are under-resourced compared to other American colleges and universities.
Joe Biden on Student Loans: A Short History
Biden’s no newcomer to the political scene. From 1973 to 2009, Biden served as a United States Senator for Delaware. He then served as Vice President under President Barack Obama from 2009 to 2017.
Throughout his political career, Biden supported and voted on key measures relating to student loans and borrowers.
- 1978: Supported the Middle Income Student Assistance Act, which expanded eligibility for federal student loan borrowing to all students
- 1978: Co-wrote a bill that established a minimum amount of time students had to wait between leaving college and filing for bankruptcy on student loans
- 1980: Voted to create the Parent Loan for Undergraduate Student (PLUS) program
- 1981: Voted to create the Auxiliary Loans to Assist Students (ALAS) program, which enabled students without parental financial support to borrow money
- 1998: Voted to add an “undue hardship” clause to federal student loan bankruptcy, making it harder to declare bankruptcy on student loans
- 2005: Biden voted in support of the Bankruptcy Abuse Prevention and Consumer Protection Act, which added the “undue hardship” clause to private student loan bankruptcy. Previously private student loans were treated the same as other commercial debt.
- 2011: The Obama-Biden administration instituted gainful employment regulations designed to hold for-profit colleges and career training programs accountable
- 2013: The Obama-Biden administrations’ Pay As You Earn (PAYE) program became available, which offered lower monthly payments and a shortened repayment period to federal student loan borrowers
- 2015: The Obama-Biden administration proposed making two years of community college tuition-free
- 2016: The Obama-Biden administration established the Borrower Defense to Repayment forgiveness program, which was designed to help borrowers who were defrauded by their college or university
Summary of Joe Biden on Student Loans
In a nutshell, here’s what Joe Biden’s hoping to do to help reduce student debt for current and future borrowers:
- Cancel student debt used to pay undergraduate tuition for qualifying borrowers
- Provide $10,000 of student loan forgiveness for all borrowers as a COVID-19 relief measure
- Make it easier to discharge student loans in bankruptcy
- Reform the PSLF program to offer forgiveness faster
- Automatically enroll all borrowers in a simplified income-driven repayment plan that reduces monthly payments
- Reinstate the Borrower’s Defense Rule and its corresponding loan forgiveness
- Make four-year public colleges free for families earning under $125,000
- Make two-year community college and high-quality training programs free for all adults
- Invest in MSIs to lower costs and increase access
- Double the maximum Pell grant award
Remember, the policies and campaign platforms outlined above represent the actions Joe Biden has said he would take or support if elected as President of the United States. None of these policies are in effect now. His campaign platform may change as we get closer to the November election.
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College Ave: College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply. (1)The 0.25% auto-pay interest rate reduction applies as long as the borrower or cosigner, if applicable, enrolls in auto-pay and authorizes our loan servicer to automatically deduct your monthly payments from a valid bank account via Automated Clearing House (“ACH”). The rate reduction applies for as long as the monthly payment amount is successfully deducted from the designated bank account and is suspended during periods of forbearance and certain deferments. Variable rates may increase after consummation. (2)$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees. (3)This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. Information advertised valid as of 1/27/2021. Variable interest rates may increase after consummation.
ELFI: Subject to credit approval. Terms and conditions apply. To qualify for refinancing or student loans consolidation through ELFI, you must have at least $15,000 in student loan debt and must have earned a bachelor’s degree or higher from an approved post-secondary institution.
LendKey: Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
CommonBond: Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate.
Splash Financial: Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval.com
Earnest: To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest’s fixed-rate loan rates range from 3.89% APR (with autopay) to 7.89% APR (with autopay). Variable rate loan rates range from 2.50% APR (with autopay) to 7.27% APR (with autopay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms of 10 years or less. For loan terms of 10 to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 0.26% and 5.03% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 23, 2019 and are subject to change based on market conditions and borrower eligibility.
Auto Pay Discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 04/23/19. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice.
Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 303 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, e-mail us at email@example.com, or call 888-601-2801 for more information on our student loan refinance product.
Ascent: Ascent’s undergraduate and graduate student are funded by Bank of Lake Mills, Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentFunding.com/Ts&Cs. Rates are effective as of 5/1/2023 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: AscentFunding.com/Rates. 1% Cash Back Graduation Reward subject to terms and conditions. Cosigned Credit-Based Loan student must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest APRs require interest-only payments, the shortest loan term, and a cosigner, and are only available to our most creditworthy applicants and cosigners with the highest average credit scores.