What Biden’s Win May Mean for Your Student Loans and College Plans

A Biden victory signals possibilities for student loan forgiveness and free college.
What Biden’s Win Means For Your Student Loans and College Plans

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President-elect Joe Biden campaigned on promises that could ease the student debt burden for millions of Americans.

But policy experts note these proposals will require either executive orders or cooperation from Congress to move forward. Both present challenges.

“Governing by executive order is pretty far from an ideal way to run this,” says Doug Webber, assistant professor of economics at Temple University. “But on the other hand, if the other side refuses to play ball, you have to think that they're going to try to get creative with what they can do.”

Still, students could wait months or even years to see how Biden’s higher education plan comes to fruition. Here’s more on the potential policies that would most affect student loan borrowers and college students.

First up: Determine when student loan payments return

The most immediate concern for federal student loan borrowers is the return of their monthly payments, which have been on pause since March. Come January, 42.3 million borrowers can expect their payments to restart.

Wesley Whistle, senior advisor for policy and strategy, higher education at the public policy think tank New America, calls an additional suspension “very, very likely.” He says that could come from the Trump administration or the president-elect.

“What I imagine that (Biden) would do is extend it for a set time or using an automatic stabilizer approach, like once unemployment hits ‘x,’ ” Whistle says.

A Department of Education spokesperson declined to comment on whether President Trump plans to extend the forbearance during his final weeks in office. Biden's transition team also did not respond to questions about whether he would use an executive order to renew the forbearance.

Provide $10,000 in forgiveness as part of COVID relief

Biden says he plans to cancel $10,000 in federal student debt as part of COVID-19 relief.

That could wipe out debt completely for nearly 15 million borrowers who owe $10,000 or less, according to federal data. The majority of student loan borrowers (roughly 67%) have more than $10,000 in debt.

Biden also proposed an additional debt-cancellation measure for those earning less than $125,000: forgiveness of loans used to pay for undergraduate tuition at certain schools, including historically Black colleges and universities and other minority-serving institutions.

Large-scale forgiveness would be tougher to enact than COVID-related relief, says Robert Kelchen, associate professor of higher education at Seton Hall University. Biden could potentially discharge federal loans via executive action, but that would likely be challenged in court.

“The fundamental legal issue is can debts be forgiven like that without going through Congress,” Kelchen says.

Borrowers with private student loans are left out of these measures (and any existing COVID relief), but Biden does support making discharge of private student debt in bankruptcy easier.

Make (some) college tuition-free

Biden proposes free tuition for those who attend a four-year public college or university so long as their families earn below $125,000. For adults, he proposes free tuition for anyone who has not previously pursued a college degree and wants to attend community college or career training program.

He also proposed two years of tuition grants for attendees of historically black colleges and universities, tribal colleges and universities, and other minority-serving institutions.

Tuition-free college doesn’t not mean “free ride” — students still have to pay for room and board or other costs of attendance. At public four-year colleges, room and board averaged around $11,510 in 2019-20, according to the College Board.

States would be required to help with program costs.

“The Biden free college plans call for a federal-state partnership,” says Thomas Harnisch, vice president for government relations for the State Higher Education Executive Officers Association. “Certainly right now, with state budgets struggling, that would be challenging.”

Restore relief guidelines for defrauded borrowers

Experts say they expect the Biden administration to reinstate rules for borrower defense to repayment that the Trump administration restricted. The rule is used to forgive loans for borrowers who were defrauded by their schools.

Under guidelines effective July 1, 2020, it’s more difficult to be eligible for forgiveness since borrowers must prove their school intentionally misled them and they suffered financial harm, among other new requirements.

The change could come by executive order, says Betsy Mayotte, president and founder of The Institute of Student Loan Advisors, but borrowers will need to be patient.

“I will say it will take a minute because I’m sure they’ll have to go in and see where they're at,” she adds. “I don't know what might happen for borrowers who were denied in the past. I don’t know if they will be encouraged to reapply again or only reapply again if they have new evidence.”

Additional proposals to watch

  • Simplified Public Service Loan Forgiveness. Biden says he plans to shepherd legislation to simplify the current Public Service Loan Forgiveness program. He also proposed an additional program that would forgive up to $50,000 of undergraduate or graduate student debt for national or community service that would not replace PSLF.

  • Streamlined income-driven repayment. Biden proposes a new income-driven plan (seemingly, in addition to the four existing ones) that would automatically enroll all new undergraduate loan borrowers, set payments at 5% of their monthly income and forgive any remaining balance after 20 years, tax-free.

  • Expanded Pell Grant amounts and eligibility. Pell Grants are free federal aid available to students who demonstrate financial need. Biden supports doubling the maximum grant (up to $6,345) and expanding eligibility to middle-class students. He also supports broadening eligibility to include DACA students (known as Dreamers) and those who were formerly incarcerated.

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