5 student loan questions we’d like them to ask during presidential debates
The wait is rising for the first presidential debate on Tuesday. While President Donald Trump and Democratic presidential candidate Joe Biden are expected to address topics such as race and violence in U.S. cities, COVID-19, the Supreme Court, and the economy, there is at least one topic important thing missing from the debate agenda: student loans.
As pandemic relief efforts continue, serious questions arise about the cost of college education and what to do with student loan debt. However, there is no time scheduled for the two candidates to discuss their proposals.
Below are five questions about student loans that we want both applicants to address in one of the upcoming debates.
1. Will federal student loan relief be extended beyond December 31?
Congress passed The Coronavirus Aid, Relief and Economic Security Act (CARES) in March. This marked a massive effort to provide much needed aid to a country struggling to cope with the impact of a global pandemic.
One of the remarkable efforts of the CARES Act has been the automatic, interest-free deferral of most federal student loans until September 30. In August, Trump ordered the Secretary of Education to extend the temporary suspension of most federal student loan payments (as well as collection efforts and interest) until the end of the year.
Some 35 million borrowers are currently eligible to suspend their federal student loan payments. Yet many of these borrowers, along with private student loan borrowers and others who do not qualify for relief, are concerned about what will happen when the current relief measures expire in January 2021.
The Trump campaign has yet to say whether it intends to provide student loan borrowers with a third wave of relief once the administration’s current coronavirus forbearance extension ends. A joint Biden-Sanders Unit Working Group, however, says Biden would back Democrats working to authorize up to $ 10,000 in student loan debt relief per borrower in response to the pandemic.
2. Will private student loan borrowers receive coronavirus relief or protection?
About 8 percent of student loan borrowers use private loans to help fund education spending, according to MeasureA. Yet student loan flexibilities like interest-free forbearance made available by the CARES Act (and the President’s Extension) only apply to qualifying federal student loans – so if you’re juggling private student loans during the coronavirus crisis, your options may be limited.
It is not clear whether any of the applicants are considering offering additional student loan relief to borrowers with private loans. Whether specific relief programs are implemented, you can often sign up for forbearance or deferral with your lender to defer private student loan payments.
Many private lenders also offer additional hardship relief options borrowers facing financial difficulties related to the coronavirus. Your best bet is to call your lender – preferably before you fall behind on your payments – to ask what your options are if you are financially overwhelmed.
3. Should borrowers expect income-based repayment options to change?
There is a reason why student loan debt is called a crisis. Since 2009, the amount of money owed by student loan borrowers has more than doubled, according to the credit bureau Experiential. Experian also reports that the average student loan borrower owed nearly $ 36,000 in 2019.
Whatever your feelings about student debt, one fact is clear: Student borrowers often take on more debt than they can afford because of the debt. standard repayment plan, and many borrowers are taking advantage income-based repayment plans to make their monthly student loan payments more manageable.
Trump is proposing to take the four existing income-based repayment plans and replace them with a uniform option. Eligible participants would see their monthly payments based on 12.5% of their discretionary income. Current regimes require borrowers to pay between 10% and 20% of their discretionary income, depending on the type of income-based repayment.
Biden suggests different changes to the income-based reimbursement. The former vice president said he would exempt borrowers from all payments on undergraduate student loans if they earn $ 25,000 or less per year. All other borrowers would only pay 5% of their discretionary income.
4. Is the cancellation or postponement of the student loan on the table?
The federal government currently offers student loan forgiveness or the cancellation of several types of student loan borrowers. However, qualifying to have your federal student debt forgiven or forgiven under current programs can be a long and difficult process. In September 2019, the U.S. Government Accountability Office indicated that 99 percent of applicants seeking Public service loan remission had their applications refused, even after the temporary extension of the program in 2018.
Trump signed an executive order in August implementing automatic federal student loan debt forgiveness for permanently disabled U.S. veterans. He also proposed a major change regarding the student loan exemption in his Budget 2021.
As part of his new single, income-based repayment plan, he suggests giving up remaining federal student loan balances after 15 years for undergraduate borrowers and after 30 years for graduate borrowers. Right now, undergraduates in income-driven repayment plans wait 20 to 25 years for a potential forgiveness of their remaining loan balances.
Trump also proposed to expand the Pell scholarship program to make federal student aid available to more low-income students (including incarcerated students) seeking funding for career-oriented training programs in key industries.
Biden said he wanted to develop a program that would write off $ 10,000 in student loan debt every year (up to five years) that a borrower works for a community or national service organization. He also intends to pass a law that would cancel federal student loan debt for eligible borrowers once they work for a government agency (federal, state, local or tribal) for at least 10 years.
5. Could tuition-free university be possible in the future?
The tuition-free university was a recurring topic during the Democratic presidential primaries. The Trump campaign, meanwhile, has remained largely silent on the issue. And it doesn’t look like we’ll be hearing about this from either candidate in the first presidential debate.
Since winning the Democratic presidential nomination, Biden has proposed making tuition free at public universities and community colleges for families earning $ 125,000 a year or less. A about 80 percent of American families would be able to take advantage of the benefit if it became reality.
Of course, both candidates have been criticized for their student loan proposals and initiatives (or lack thereof). Opponents accuse Trump of doing too little to help student borrowers during his tenure. His new 2021 budget proposal cut funding for the education ministry by $ 5.6 billion. Supporters are quick to point out, however, that the income-based repayment plan is changing, the borrowing limits for parent PLUS and grad PLUS loans, and other educational proposals would allow the Federal Student Aid Office to better serve student borrowers without placing an excessive burden on taxpayers.
Meanwhile, Biden’s student loan proposals are more progressive. The idea of a college tuition-free education and more student loan forgiveness options for existing borrowers is certainly appealing to many. Still, Republicans stress that the price to pay for such measures would almost certainly be paid by higher taxes – probably to a large extent. Moreover, getting Congress to adopt such drastic measures could prove to be an almost impossible undertaking.
Next steps for your student loans
Once the election results are clear, only time will tell what student loan measures the Trump or Biden administration will be able to implement.
In the meantime, paying close attention to your existing student loans is essential so that you can put together the best possible plan to manage them right now. Evaluate your options based on the types of student loans you have and your overall financial situation.
As mentioned, most federal student loans are deferred until December 31st. Once the special coronavirus forbearance period is over, you may want to consider student loan deferral, discussing income-based repayment options with your manager or even refinance your federal student loans. (Note: Refinance cautiously, as refinancing will cause you to lose federal benefits.) Finally, if you have a loan issued by a private lender, it may be time to freeze a lower interest rate or ask for some form of deferral.