With student loan debt topping $1.6 trillion and over 40 million borrowers struggling to repay their debts during Covid-19, both President Trump and former Vice President Biden have plans to address one of the most important topics amongst the 2020 presidential election.
Joe Biden plans to cancel up to $10,000 of student loan debt for each borrower with community service, for up to 5 years. Biden also calls for forgiveness of all tuition-related undergraduate federal student loan debt at two to four year public colleges, if their borrower makes less than $125,000 yearly. However, Federal student loans for private colleges, graduate student loans, private student loans and any other commonly known system would not be included in this forgiveness. He wants to simplify the student loan repayment process by defending the motion that borrowers can discharge their debt.
President Trump plans to combine all existing income-driven repayment plans into one.
- Undergraduate loans would decrease from a 20 to a 15 year repayment term, and graduate loans would increase from a 25 to a 30 year repayment term.
- Current income-driven options set payments between 10% and 20% of how much is left after filing taxes.
- Severely delinquent borrowers may be automatically enrolled for income-driven repayment plans under the Trump plan rather than opting in.
Student loans that can take years to pay off are damaging the finances of millions, a weight that will hold back consumer spending at a time when the economy needs it most. The likelihood for major changes to student loan forgiveness depend largely on the outcome of the November presidential elections.