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2021

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JOE BIDEN STUDENT LOAN RELEIF

Joe Biden’s Executive moves toward student loan relief and student loan forgiveness.

Daniel Morgan

Updated – Feb 10th 2021

President Joe Biden has plans for America's Student Loan Debt

Now with President Joe Biden in office. There is new hope on the horizon for federal student aid borrows. And individuals with tons of student loan debt. As our new Commander and Chief. One of Biden’s first actions in office was the signing of a new executive order that would suspend student loan payments until September 30th 2021.

Biden’s Initial American Rescue Plan from mid Jan did not include any student loan forgiveness or cancellations. However, he is requested that congress approve proposals. Seeking the removal of $10,000 in student loan debt for federal student loan borrowers. 

Sens. Elizabeth Warren and Chuck Schumer both called for the cancellation of $50,000 in student loan debt for each borrower. This law was introduced by the democratic Sens. on Feb 4th. Secretary of the white house Jen Psaki. Make clear that President Biden’s support for such options was valid. 

In a recent twitter post. Secretary Psaki wrote: “Our team is reviewing whether there are any steps he can take through executive action and he would welcome the opportunity to sign a bill sent to him by Congress,”

$10,000 Student Loan Forgiveness Proposal

As part of the COVID-19 Relief Plan. Much support was pushed for Congress to immediately cancel $10,000 in federal student loan debt for students. This bill would have eliminated student loan debt for approximately 15 million student loan debt borrowers. About 34% of student loan borrowers owe less than $10,000 in loans. 

Other possibilities for student debt relief

If you earn less than $125,000. Biden’s plan references a phase-out of this benefit but does not offer further details.

If you used the loans for undergraduate tuition. Graduate student debt would not be canceled under Biden’s proposal.

If you attended a public college or university. Attendees of private historically Black college and universities and additional minority-serving institutions would also be eligible.

Unfortunately for individuals with private student loans. non of these possible opportunities for forgiveness will be an option. However New President Joe Biden, has mentioned taking steps toward adding private student loan debt to the list of dischargeable debt in bankruptcy laws. 

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What's New with PSLF (Public Service Loan Forgiveness)

President Biden has talked about new student loan forgiveness programs for public servants who have student loans. 

President Biden will restructure the PSLF makeup. He Suggest new qualifying additional federal loans and repayment options for PSLF.  Also half your balance be forgiven after five years.  

 Public Service Loan Forgiveness would still remain. Which is available to government employees, Educators and  nonprofit employees. Borrowers must make 120 eligible payments to have their remaining balance forgiven.

Up to $50,000 would be forgiven. By way of President Biden’s new plan, $10,000 of a borrowers student loan debt would be automatically canceled for each year one performs eligible service for  five years total.

Covid-19 Student Loan Forbearance

Federal student loan forbearance first got approved in March. It was then extended  on Dec. 4, 2020. It was set to end Jan. 31, but President Biden  upon inauguration extended the forbearance through Sept. 30, 2021.

The forbearance also reduced all interest rates down to 0.0%. Allow individuals that would still like to make payments during the forbearance. To capitalize on 100% of their payments being applied to their principal balance. 

Furthermore, this forbearance also prevents all default penalties and collection agency retaliation proceedings. 

Income-Driven Repayment Plan Restructure.

Pay $0.00 dollars if your income is less than $25,000 a year. You can currently qualify for $0 payments based on your income, the federal poverty line and your family size.

You will not have to count forgiveness as taxed income. Plans would forgive any remaining undergraduate balance tax-free after 20 years. Existing options offer forgiveness after 20 or 25 years, depending on the plan and would be taxed

Graduate student loans would not qualify.  — for which the average student debt is $71,000, according to the National Center for Education Statistics — would be ineligible.

Borrowers would only be responsible for 5% of discretionary income. Current income-driven plan payments between 10% and 20% of your discretionary income, depending on the plan.

Automatic Enrollment – All new and existing borrowers would be automatically enrolled in this new plan with the option to opt out.

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Larger Tuition Grants

The most famous grant for most low income education seeks. is the Pell Grant. Currently this grant rewards up to $6,345, this handles less than 60% of most four year colleges. Based on talks, the Presidents plan would increase these amounts. 

Free Tuition For College

The President has high hopes in making tuition for college free for most colleges and universities.

Community College tuition would be free — for two years if you hadn’t previously pursued a postsecondary degree. You could also use these funds for a career-training program.

Minority Institution. Grants would pay up to two years’ tuition at historically Black Colleges and Universities, tribal colleges and universities.

Attend a University or College. Tuition would be free for four years if your family has an income below $125,000. excluding private institutions. 

Important takeaways

President-elect Biden said federal student loan debt cancelation figures into his plan. “It’s holding people up,” he said about student loan debt. “They’re in real trouble. They’re having to make choices between paying their student loans and paying their rent, those kinds of decisions. It should be done immediately.” But he has not formally stated whether action will come from the executive branch or Congress. In December, he told a gathering of newspaper columnists it was “questionable” whether a president has the executive power to forgive $50,000 in federal student debt — a larger sum urged by several members of Congress.

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