By Anna Helhoski
The 2020 presidential election could change the way you repay student loans, whether debt forgiveness is in your future and even how you or your children pay for college.
Campaign proposals are no guarantee of laws to come, but they show which ideas are taking root. Here are the student loan and college proposals that policy experts say might bear fruit.
Likely: Revised Income-Driven Repayment Plans
Regardless of who wins, there’s bipartisan support to consolidate existing income-driven repayment plans, according to multiple experts.
Currently, 32% of borrowers in repayment are enrolled in income-driven plans, according to the most recent data available from the Office of Federal Student Aid. The most frequently used plan — Revised Pay As You Earn, or REPAYE — caps payments at 10% of a borrower’s discretionary income and extends the term to 20 or 25 years. Any balance remaining at that time is forgiven and treated as taxable income.
“I think we will see a lot of efforts to try to move people toward a single program,” says Clare McCann, deputy director for federal higher education policy at New America, a public policy think tank. “The disagreement will be what is the one IDR plan to rule them all?”
The proposed plans differ by how payments are set: Former Vice President Joe Biden proposes capping payments at 5% of a borrower’s discretionary income, while President Donald Trump proposes setting payments at 12.5%.
Only undergraduate loans would qualify under Biden’s plan, and debt would be forgiven tax-free after 20 years. Trump proposes lowering the existing repayment term from 20 years to 15 years for undergraduate debt and increasing the term from 25 years to 30 years for those with graduate debt. Forgiveness would still be taxed.
None of the current plans would sunset for existing borrowers, experts say. But new borrowers would have access only to the new one.
Possible: Federal Loan and Pell Grant Changes
Both candidates want to update the Pell Grant Program, which is need-based aid. Biden calls for doubling grant amounts and expanding eligibility to cover more of the middle class. The grants currently cover less than 60% of tuition and fees at public four-year colleges, according to a NerdWallet analysis.
Trump, meanwhile, wants to expand eligibility for students in qualified skills-based programs. Doug Webber, assistant professor of economics at Temple University, says there’s appetite on both sides of the aisle to expand eligibility.
Trump also proposes setting limits on parent PLUS and grad PLUS loans, and eliminating subsidized student loans.
The PLUS program is a more likely candidate for change, says James Kvaal, president of The Institute for College Access and Success. But he says a cap affects college accessibility and puts a racial equity question into play. “It’s often Black families who don’t have the wealth to finance college who rely most heavily on parent loans,” says Kvaal. “The question is: Are students going to be better off if you cap those loans?”
Don’t expect subsidized student loans to go anywhere since it’s not a “big ticket” item in the federal budget, and its removal would affect the most in-need students, Webber says.
Uncertain: More Student Loan Forgiveness
Biden proposes federal student debt cancellation for all loans used for undergraduate tuition at a public college so long as the borrower earns less than $125,000. He’s also calling for up to $50,000 in debt cancellation for those working in public service.
But experts say financial strain due to the COVID-19 pandemic might mean student loan forgiveness will take a back seat among lawmakers.
“I don’t see them, in the near future, taking a big pot of money and throwing it at forgiving student loan debt,” says Betsy Mayotte, president and founder of the Institute of Student Loan Advisors.
Both candidates are calling for changes to the Public Service Loan Forgiveness Program, which requires 120 payments while working in public service. The program is mired in so much red tape that up to 98% of applicants have been rejected, according to Department of Education data.
Biden wants to streamline enrollment into PSLF. But Trump proposes ending it to instead funnel borrowers into his new income-driven repayment plan.
Experts say PSLF has support in Congress and is unlikely to sunset. On the off chance it does, borrowers already in pursuit would not be affected, Mayotte says.
Biden also supports forgiving $10,000 for all federal student loan borrowers as part of COVID-19 relief. Currently, all federal student loan borrowers are in an automatic, interest-free payment pause, a measure in the original CARES Act. That pause was recently extended through the end of 2020 by Trump’s executive order.
Long Shot: Tuition-Free College
There’s potential for free college under a Biden administration, but more limited than his proposals, experts say. Biden calls for free tuition at four-year public colleges for families earning under $125,000; up to two years at Minority Serving Institutions; and two years at community colleges and qualified career training programs.
President Trump does not propose any tuition-free college initiatives.
Among the proposals, Webber says free community college could happen. “If they decide public education is the battle they want to pick, then free tuition at community colleges is the easier sell,” says Webber.
However, it’s unlikely states and colleges will buy into a free tuition program mandated by the federal government, says Jason Delisle, resident fellow at American Enterprise Institute, a public policy think tank. He adds, “How does the federal government make them set tuition at $0? They can’t make them do that.”
Kvaal says it won’t just be the presidency that will affect the outcome of any free college proposal. “It’s difficult to see this passing in a Republican-controlled Senate, but if the Democrats control the House, the Senate and the White House, it’s possible for something like this to get serious consideration,” he says.
The Trump and Biden campaigns did not respond to a request for comment.
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Anna Helhoski is a writer at NerdWallet. Email: email@example.com. Twitter: @AnnaHelhoski.