Joe Biden Student Loan Plan: What It Means To you
The student loan forgiveness plan is set to be passed as it has proposed to wipe off either $10,000 or $50,000 in student loans. The extension of the student loan payment cause through September 2021 has only added to the eagerness in the minds of proposed beneficiaries. What is Joe Biden’s student loan plan all about?
However, the extension is to help Democrats reach an agreement regarding what the student loan forgiveness will contain. There has been a back and forth movement regarding the continuation of the proposal. Progressives are of the opinion that President Biden has the executive power to cancel out the bill but President Biden requests that congress sends him a bill first.
President Biden during his campaigns seemed very enthusiastic about bringing tangible changes to the education is sector. From the start, the proposal was to have a bill that excuses $10,000 of student loans for borrowers. Senator Chuck Schumer and Elizabeth Warren on February 4th pushed for a bill where the loan forgiveness amount to $50,000 per borrower.
During a CNN town hall on February 16, President Biden is reported to have said he is ready to sign off $10,000 of student loan for borrowers but not $50,000. He said he does not have the executive power to sign such an amount. But on February 19, a set of 17 state attorney generals said he had the power to forgive $50,000 of student loan per borrower in accordance with the Higher Education Act.
Biden’s officials reaffirmed the President’s support for the forgiveness of student loan but the plan is still in progress. Based on statistics, the student loan forgiveness proposal will wipe out the loan of around 15 million borrowers owing a student debt of $10,000 and less. Yet, a percentage population of around have more than $10,000 in student debt. For this category, only the $50,000 proposal will help in completely wiping off their student debt but the amount that will be approved remains uncertain.
Additional Conditions To Benefit From Student Loan Forgiveness
President Biden added a list of categories to benefit from the student loan plan. These categories include:
- Attendees of public colleges and universities are going to be eligible for student loan forgiveness.
- Those who used their loans for undergraduate tuition are eligible for the loan but graduate school loans are excluded from the forgiveness proposal.
- In the aspect of public service, borrowers will have $10,000 of their loan forgiven for each year that the borrower performs public service. A borrower is eligible for five years of public service with the outlined benefit.
A New Income-Driven Repayment Plan
President Biden has proposed a new income-driven repayment plan with just some varying features from the already existing plan. This includes:
- Graduate school student loans will be ineligible for this repayment plan. The loans for this category amount to $71,000 on average hence only undergraduate loans qualify.
- In the new plan, people eligible are to pay 5% of their income as opposed to the current 10% to 15% of earned income.
- Those who make below $25,000 monthly will be excluded and hence would not have to give out 5% of their income.
- The forgiveness plan sets to cancel student loans and the amounts will be tax-free. That is, borrowers would not have to pay tax for the amounts.
- Once it is implemented, all new and old borrowers will be automatically added to this repayment plan but borrowers will have the option to opt out at will.
Increase In Grants
Students who show financial incapability are generally eligible for grants. These grants usually amount to over $6,000 but it barely covers for all of the student expenses. However, Biden looks forward to increasing eligibility for these grants in order to cover the middle-class population.
Tuition-Free College Programs
President Biden has proposed to make college tuition free in some instances. These instances include:
- Free tuition for up to four years for students that attend a public college or university and comes from a family for the earned income monthly falls below $125,000.
- Attendees of a private minority institution will be eligible for grants set to cover two years of tuition.
- Attendees of community colleges would be eligible for free tuition for two years when they seek to pursue their first post-secondary degree.
These plans only seek to cover tuition fees and students will still be responsible for other fesses like housing, expenses, books, and so on.
The Biden administration seeks to restore borrower defense rules which were restricted during the Trump administration.
This will forgive loans for borrowers who have been defrauded or scammed by their schools. To qualify for this, the borrowers would have to present valid proof that shows that they actually were defrauded by their school.