What do Donald Trump and Joe Biden think of your student loans?
Here’s what you need to know.
Student loans: Trump versus Biden
As the presidential race heats up, so does your student loan balance. It’s been a big year for student loans, which have dominated press titles especially for several months. President Trump and former Vice President Biden have different views on student loans, and it’s important to understand what their positions on student loans mean to you.
Student Loan Forgiveness:
Trump and Biden support student loan forgiveness through income-tested repayment plans.
- Student Loan Forgiveness: Trump backs student loan forgiveness through income-driven repayment plans.
- A package : Trump would have a simple income-based repayment plan (rather than multiple plans) to minimize confusion.
- Student Loan Forgiveness: Cancellation of all federal student debt related to undergraduate tuition two- and four-year public colleges and universities for borrowers who earn less than $125,000 a year.
- The government pays: The federal government would make your monthly federal student loan payments until your student loan debt is paid off.
- HBCUs/MSIs: The student loan forgiveness would also apply to borrowers with federal student loans for tuition from historically black private colleges and universities (HBCUs) and minority-serving institutions (MSI).
Student loan repayment plans
- Sorry in 15 years: Trump has proposed an income-based repayment plan that would cancel federal student loans for undergraduate borrowers after 15 years of student loan repayment.
- Monthly payment: Under this plan, your monthly federal student loan payment could be 12.5% of your discretionary income (compared to 10% now).
- Current packages: Currently, you can receive federal student loan forgiveness after 20 years (undergraduate student loans) or 25 years (graduate student loans) under existing income-tested repayment plans.
- Forgive earlier: Under Trump’s plan, undergraduate borrowers could get student loan forgiveness five years earlier.
- Cancel student loans: Biden said we should forgive at least $10,000 in student loan debt per person.
- Less than $25,000 per year: You would make no monthly federal student loan payments and no interest would accrue on your federal student loans.
- More than $25,000 per year: you would pay no more than 5% of your discretionary income for federal student loan repayments.
- Student Loan Forgiveness: After 20 years, your federal student loans will be forgiven and you will not owe any tax on the student loan forgiveness amount.
Suspend student loan payments
- First to suspend payments: Trump suspended your federal student loan payments through an executive order for 60 days.
- CARES Act: Trump’s executive order became the basis for student loan benefits in the CARES Act, the $2 trillion financial stimulus legislation that Trump later signed into law.
- Help with student loans: Key benefits of the CARES Act that flow from Trump’s executive order include, for example, suspend all payments for federal student loans, set interest rates at 0% and suspend collection of student loan debts until September 30, 2020.
Cancellation of civil service loans
- No PSLF: Trump has called for the elimination of the civil service loan forgiveness program.
- Taxpayers: President and Education Secretary Betsy DeVos said they want to balance the needs of student borrowers and federal taxpayers.
- Reasoning: Eliminating this program, they say, would save the federal government money by avoiding having to write off potentially billions of dollars in federal student loans.
- Always active: The Trump plan would only affect new borrowers (not existing borrowers). To date, Congress has not funded the Civil Service Loan Forgiveness Program, and it is currently active.
- Supports PSLF: Biden supports the Civil Service Loan Forgiveness Program.
- Student Loan Forgiveness: For borrowers in public service loan forgiveness, Biden says they can receive $10,000 a year in federal student loan forgiveness for up to five years.
- No “free college”: Trump did not support tuition-free college.
- Cancel student loan debt: Building on the plans of Sen. Bernie Sanders (I-VT) and Sen. Elizabeth Warren (D-MA), Biden said we should cancel all federal student debt related to undergraduate tuition two- and four-year public colleges and universities for borrowers who earn less than $125,000 a year.
- COVID-19[FEMININE:[FEMININE: Given the economic impact of the Coronavirus on many state coffers as well as concerns about whether many colleges and universities may even reopen this fall“free college” may be on the back burner for now.
- Reasoning: Why? Most “tuition-free” college proposals assume that state governments would “pay” (along with the federal government) a portion of this student loan forgiveness. This may be more difficult in the wake of COVID-19, which has placed enormous financial pressure on states.
Cancel student loan debt in bankruptcy
- Support?: Trump hasn’t really commented on whether he would support a proposal to forgive student loan debt in the event of bankruptcy.
- Cancel student loans: Biden also has asked for student loans to be discharged from bankruptcy.
- Previous post: Previously, Biden was not in favor of canceling student loan debt in the event of bankruptcy.
- Bipartisan support: There is also bipartisan support in Congress for allowing borrowers to repay their student loans in the event of bankruptcy.
How to pay off student loans faster
What’s the best way to pay off student loans faster? Start with these four options, all free of charge:
Whoever wins this November, be sure to invest time in having a game plan to pay off your student loans faster. The COVID-19 pandemic and the state of the economy can also have a big impact on the future of student loans. Remember that campaign rhetoric on student loans doesn’t always turn political after the election. It is therefore essential that you repay student loans it doesn’t matter who wins and what policies, if any, are implemented.