Will the Next U.S. President Forgive My Student Loans?
Policy proposals to reduce or forgive student loans increasingly capture headlines as the U.S. prepares for the 2020 presidential election
About the author: Kevin Mahoney, CFP® is a fee-only financial advisor in Washington, D.C. Kevin's work with his peers focuses on paying off student loans, buying a house, investing savings, and budgeting. Kevin is the founder & CEO of Illumint, a virtual financial planning firm specifically designed to help couples and young families with their financial decisions.
With more than 40 million people in the United States carrying student loan debt, policy proposals to reduce or forgive this burden increasingly capture headlines as the country prepares for the 2020 presidential election. In fact, one former presidential candidate -- South Bend mayor Pete Buttigieg -- spoke from recent personal experience: Buttigieg and his husband, Chasten, currently owe $130,000 themselves.
Based on the results from "Super Tuesday" and other early primaries, Joe Biden and Bernie Sanders are the leading contenders for the 2020 Democratic nomination. Here, along with the Republican incumbent Donald Trump, are the student loan proposals that they have offered to date:
Adam Minsky wrote for Forbes that “Biden had not released any formal proposal to tackle student loan debt until very recently. And he hasn’t said much about the proposals currently on the table [from other candidates].” In late May, though, Biden did release “a proposal to simplify and streamline the Public Service Loan Forgiveness program, with a focus on teachers – similar to a bill proposed by Sen. Gillibrand and Sen. Kaine.”
As Jillian Berman at Marketwatch reported, Biden has in the past also supported the idea of a free college option. In 2015, he said, “We need to commit to 16 years of free public education for all our children. We all know that 12 years of public education is not enough. As a nation, let’s make the same commitment to a college education today that we made to a high school education 100 years ago.”
Annie Nova wrote for CNBC in late June 2019 that Sen. Bernie Sanders announced a plan that would “erase the country’s $1.6 trillion outstanding student loan tab.” The $2.2 trillion plan, which Sanders calls “The College for All Act,” would “release all 45 million Americans from their student debt” and be paid for by a new tax on financial transactions, including a 0.5 percent tax on stock transactions and a 0.1 percent tax on bonds.” Sanders’ plan also would “make two- and four-year public colleges and universities tuition- and debt-free. Trade schools and apprenticeship programs would be tuition-free, as well.”
In late March 2019, Ella Nilsen wrote in Vox about the Trump administration's interest in reducing borrowers' repayment options to two plans: a standard 10-year, fixed repayment plan and an income-driven repayment (IDR) plan:
“The Trump administration also wants to end the Public Service Loan Forgiveness program, which is intended to forgive the loans of those who work in public service like teachers, nurses, or police officers and firefighters, after 10 years of payments. ...Instead, the Trump administration is proposing forgiving all undergraduate student loans after 15 years, and cap loan payments at 12.5 percent of a borrower’s discretionary income. Forgiving the debt of all undergrad students after 15 years is a fairly progressive idea, but it’s tough to know how it would actually look in reality — especially given the Public Service Loan Forgiveness program’s rocky start under the Trump administration’s watch.”
Even if the candidate who wins the 2020 presidential election does ultimately help with your student loans, it's critical to take more immediate action yourself. If you're not sure where to start, consider familiarizing yourself with different student loan terminology or working with one of the better student loan repayment calculators online.