By Jeannie Tarkenton, Founder & CEO of Funding U
At Funding U, we make no cosigner student loans that college students need to succeed. So we get it — student borrowers need to know what could happen now that Biden is taking office. Students and families are wondering what the future holds for Biden and loan forgiveness, stimulus benefits, and overall assistance with college costs.
Read our coronavirus updates post to see what kinds of changes are in the second stimulus package that was signed in late December 2020.
As far as the new presidential administration taking office in 2021, there could be some major changes for college loans. Here, I’ve rounded up some of the key developments that could be coming. As you read this, keep in mind that the only ‘fact’ about politics is that nothing is 100% certain. Remember to follow the news and any developments that may affect you!
Biden and loan forgiveness: Could he really pass a $10K forgiveness program?
The Biden administration has said it aims to pass $10K in loan forgiveness and some – but not nearly all – other campaign proposals for students. What should students and parents expect in the months to come?
The good news for loan forgiveness and other changes under Biden
Here’s the good news — political watchers believe that the Biden administration will do the following:
Pass a $10K loan forgiveness package in its first 100 days. Most analysts predict that a new package for Biden and loan forgiveness will be tied to family income. The dollar amount may be a sliding scale where higher-income families receive a lower forgiveness award. Moderate- and low-income students are the likely beneficiaries of this kind of package.
Expanded Public Service Loan Forgiveness (PSLF) program. Biden’s team has said they want to simplify and expand the loan-forgiveness benefits for students who do national or civic service after college. The discussion so far suggests they’re looking at forgiving up to $10,000 in federal loan debt for each qualified year of service.
Expand loan-repayment programs for income-based forbearance. In other words, it should become much easier to understand and qualify for lower loan payments if you are unemployed or underemployed after graduation.
Secure benefits for students of for-profit colleges. The administration aims to make it easier for students who attended for-profit colleges in the past to get some of their loan debt forgiven, discharged, or significantly reduced.
Expand Pell funds. Because expanded Pell benefits were included in the second stimulus package, the federal grant program might not see sweeping changes under Biden. Still, political analysts agree that the Pell program is where Biden is most likely to focus. It’s a powerful area where he can fulfill his campaign promises to make college more affordable for low-income students.
Support for HBCUs. Biden’s team is also likely to increase funds to historically black colleges and universities (HBCUs) to support financial aid and other programs for college completion.
The bad news for student loans under Biden
Unfortunately, here’s the bad news — those promises from the campaign trail that are unlikely to get passed:
Unlikely: The $50K or full-debt forgiveness plan. Experts do not think that the Biden administration will be able to push through the $50K or full-debt forgiveness that had been mentioned on the campaign trail.
Unlikely: Free tuition for all. Also unlikely due to the high cost of such a program, few people expect to see a large-scale program of free tuition. However, don’t forget that Dr. Jill Biden is a community college professor. Several experts believe that some program focused on community college tuition reduction or similar is still a strong possibility.
Watch the news carefully
With a brand new administration taking office, these developments are in full swing right now. Even if you’re not a political news watcher, it’s worth it to follow the news carefully related to student loans. The benefits could be extremely valuable to you and your family. What’s more, the changes to loan-forgiveness programs could even impact your professional choices after graduation.
No cosigner student loans from Funding U
At Funding U, we make no cosigner student loans directly to college students. We don’t look at your parents’ credit; we look at you, your academic progress, and your financial plan. Apply online.
Check out our latest blog posts for tips and useful info about managing money in college, navigating the job market, and more.
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