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Thursday, October 22, 2020

For student loan borrowers, the differences between a Trump and Biden presidency

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Trump and Biden would approach the student loan crisis very differently.

Jim Watson | AFP | Getty Images

Whether Donald Trump or Joe Biden wins the presidency may have a significant impact on the country’s 42 million student loan borrowers.

Student loans have outpaced credit card and auto debt as a burden to Americans, and each year 70% of college graduates start off their lives in the red. The average balance is around $30,000, up from $10,000 in the early 1990s, and many borrowers owe $100,000 or more. The typical monthly payment is $400. 

There’s a clear desire for change: More than half of Americans say student debt is “a major problem” for the country, according to a Politico/Morning Consult poll.

Here’s what the different views of the candidates may mean for borrowers.

Monthly bills

Trump has proposed monthly payments for student loan borrowers that would be 12.5% of their discretionary income. Undergraduate students would pay for 15 years, and graduate students for 30 years.

Meanwhile, Biden has called to set the monthly loan bills at 5% of borrowers’ discretionary income and they would be on the plan for 20 years.

Public service loan forgiveness

Biden would keep the program but make changes to it. Instead of canceling borrowers’ remaining debt after a decade, he would forgive $10,000 a year of their debt for up to five years.

Student loan forgiveness

As president, Biden says he would forgive tuition-related undergraduate federal student loan debt picked up at public colleges and historically Black colleges and universities for those earning less than $125,000 a year.

He would also forgive $10,000 in student debt for all borrowers.

Trump has said nothing about sweeping student loan forgiveness.

Bankruptcy protections

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