Joe Biden’s Student Loan Plans: 5 Changes You’ll See Soon


President-elect Joe Biden outlined a comprehensive plan to reform federal student loans. (iStock)

The coronavirus epidemic has affected our daily lives, including financial aspects – such as mortgages and student loans. But student borrowers have had a much-needed break thanks to the CARES Act, and the student loan refinancing rate has reached a record low, giving private student lenders the opportunity to save money.

After the November 2020 election, student loan borrowers may wonder, “What’s next? Will there be further extensions or options to alleviate student loan debt?” If you have private student loans, you still need to take a break and consider refinancing while prices are low. You can compare interest rates and lenders through Authenticator’s multiple lender websites today.

Here you should find out about possible changes in student loans in the near future under President-elect Joe Biden and his administration.

Under Biden, student loans can change in 5 ways

As part of its campaign platform, Biden proposed a number of key changes to federal student loans.

These changes, if they become a reality during the new administration, may further affect the borrowing and repayment of student loans. As the inauguration day approaches, here is the most important information.

  1. Some federal student loan debts can be canceled
  2. You can take out fewer student loans
  3. Releasing a student loan can become easier
  4. Pell grants may be expanded
  5. Income-driven repayment plans are subject to change

1. Some federal student loan debts may be canceled

As the focus of his higher education plan, Biden suggested seeking federal student loans of up to $ 10,000 for eligible borrowers. This can help you get bogged down in what you owe.

But there is a problem: the waiver does not apply to private student loans. If you have private student loans, refinancing them can still save you money – especially because the Federal Reserve is committed to keeping the Fed’s base rate low until at least 2022.

Refinancing loans can reduce your interest rate and monthly payment. Visit the Authorized page and compare variable interest rates and fixed interest rates to refinancing loans from multiple lenders without affecting your credit.

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2. You can take out fewer student loans

Rising tuition is one of the biggest drivers that encourages students to take out federal student loans and private loans. One possible solution Biden has proposed to combat the high cost of education is to allow two- and four-year public colleges to be tuition-free for families earning under $ 125,000 a year.

You will continue to be responsible for other costs of participation, such as room and board, books, supplies and shipping costs. But by making the university tuition-free, Biden’s plan could reduce the reliance of certain borrowers on student loans to pay for the university. This means less student debt to pay after graduation.

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3. Releasing a student loan can become easier

Currently, student loan waivers allow eligible borrowers to repay a portion of federal loans after 120 qualified payments. This type of forgiveness is available to borrowers who have eligible federal student loans and are enrolled in an income-based repayment plan.

President Biden’s proposed plan would make it easier to forgive student loans. A $ 10,000 undergraduate or student student loan is granted for each year of national or community service performed by the borrower. This benefit can be claimed for up to five years and retroactively for borrowers who are already enrolled in the public service loan.

Again, this would only apply to federal student loans. Private student loans would not be eligible, which is another reason to consider student loan refinancing options through Credible and determine how much you can save on monthly payments and beyond.

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4. Pell grants may be expanded

The purpose of the Pell Scholarships is to enable lower-income students to pay at the university independently of student loans. President-elect Biden proposed doubling the maximum amount of Pell support and expanding benefits to include more middle-class Americans. Any measure can help make the university more affordable and accessible. Getting more Pell support could mean fewer student loans are needed to make up for borrowers ’financial shortfalls.

If you are not eligible for a federal student loan, grant, or any other scholarship, consider taking out a private student loan. With Authenticator, you can compare the interest rates of up to eight private lenders at once.

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5. Income-based repayment plans are subject to change

Income-based repayment plans can make it easier to keep federal student loan payments up to date. Biden’s income-based repayment plan may allow you to pay less towards loans.

Specifically, if you earn $ 25,000 or less a year, you don’t have to pay for university federal loans. Your loans don’t accrue interest either, which saves you extra money.

Borrowers above this income threshold would pay 5% of their discretionary income over $ 25,000 for loans. After 20 years, they will be forgiven any credit balances that were scheduled to meet those people.

If you want to change the terms of your loan or shorten the life of your loan, consider refinancing your private student loan today. The Trustee can help introduce you to the loan officers or complete the process completely.

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What to do if you have a private student loan

Biden’s plan extended to student loans but did not include private student loans. If you have private student loan debt, refinancing your loans is one option you should consider.

If you have a good credit history and a credit rating, you can now set a lower interest rate on your loans. The same is true if you have a cosigner with a good credit history who is willing to sign loans with you.

By comparing the interest rates of different lenders, you can get an idea of ​​how much money you could save by refinancing. And take the time to run the numbers through an online student loan calculator to estimate your new monthly payments.

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