Presidential Candidate Joe Biden has expanded his plans for dealing with the student loan debt crisis. He announced that he is proposing to forgive all undergraduate federal student loan debt for borrowers who attended public colleges and universities.
This announcement comes as Senator Bernie Sanders dropped out of the race for president. Sanders wanted to cancel all student loan debt tax-free with no limitations, including both federal and private student loans.
In Biden’s proposal, forgiveness would be available for borrowers who earn less than $125,000 per year. Forgiveness is limited to “tuition-related federal student debt”. Graduate federal loans and private student loans would not be included in this forgiveness. It is only for federal undergraduate loans for public colleges. Federal student loans from private, non-profit historically black colleges and minority serving institutions are also eligible for this forgiveness.
Biden also echoes what other Democratic Senators are currently calling for – $10,000 federal student loan forgiveness to help alleviate the financial burden of coronavirus.
The former Vice President supports the proposal to allow borrowers to discharge student loans in bankruptcy.
Other Options for Repaying Student Loans
Consider refinancing private student loans. Refinancing private student loans could potentially lower your interest rate, saving you money and getting rid of student loan debt faster. Depending on your term, you could also lower your monthly payment. There are pros and cons of refinancing student loans, so understand if it’s the right option for you. Keep in mind that refinancing federal student loans would mean the loss of several benefits, including Biden’s plan for forgiveness. You would also lose the option for other student loan forgiveness opportunities, payments based off your income, and generous payment pause options in times of economic hardship and unemployment.
Find an employer who offers student loan repayment. Many companies are offering student loan repayment assistance as a perk for employees. SoFi, Abbott and Fidelity are just a few that offer student loan repayment assistance.
Make big moves. There are big money moves you could make to make it easier to pay off student loan debt. Move to an area that will help repay student loans. Downsize your home (maybe a tiny home would work for you?). Move to an area with a lower cost of living. Find a better paying job. Start a side hustle.
Make small moves. Sign up for automatic payments to save a small percentage on your student loans. Use a cash-back credit card for everyday purchases, pay off your balance in full and use the cash rewards to pay down your debt. Sallie Mae’s Accelerate credit card gives 1.25% cash back on every purchase, plus, you get a 25% bonus on cash back when you use rewards to pay down any student loan debt. Sell unwanted stuff to make extra money, find ways to earn extra cash and get creative with ways to save money.
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