Joe Biden’s Student Loan Plan: What’s in It for You?
The future of student loan debt could look quite a bit different, if President-elect Joe Biden gets his way (and Congress cooperates). From loan forgiveness to free tuition for some, the college landscape could be changing.


When the CARES Act was passed in March, payments were suspended and the interest rate was temporarily set to 0% for federal student loans. The student loan relief is set to expire on Jan. 31, 2021. Will President-elect Joe Biden extend the temporary relief? No one knows.
While there is uncertainty about what will happen after Jan. 20, 2021, we have an idea of the long-term changes that might be coming to student loans when Biden takes office.
These proposals will have to be approved by Congress to become law, but here is a summary of what Biden has proposed so far with regards to student loans.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Cancellation of up to $10,000 per borrower
On March 22, 2020, Biden tweeted that he would cancel up to $10,000 for each borrower of federal student loans. This cancellation was originally proposed by the Democrats to be included in the CARES Act. It did not make it into the act, but it is possible that the Biden administration will include the $10,000 cancellation as part of a future stimulus package.
Monthly payment capped at 5% of your income
The Biden Plan for Education Beyond High School includes changes to the current repayment and forgiveness programs for federal loans. Currently, borrowers in Income-Driven Repayment (IDR) plans are required to pay 10%-20% of their income over the federal poverty line toward their student loans. The Biden Plan would limit that to 5% of income over $25,000. Also, there would be no monthly payments required and no interest accrual for individuals making less than $25,000 a year.
Automatic enrollment in IDR and forgiveness
New and existing federal student loans will be automatically enrolled in the IDR plan. Borrowers have the choice to opt-out. This is a major change to the current complex system. Under the current federal system, borrowers pick and enroll in one of many available plans, which can be confusing. According to the proposed plan, the remaining balance of the loan will also be forgiven automatically after 20 years of payments are made. There would be no income tax on the forgiven amount in this new long-term forgiveness program.
Public Service Loan Forgiveness
Biden’s proposal suggests putting a cap on the amount of forgiveness a borrower can get in the Public Service Loan Forgiveness (PSLF) program. Again, the enrollment in the PSLF is automatic for “individuals working in schools, government, and other non-profit settings.” However, the amount of PSLF forgiveness is $10,000 of undergraduate or graduate debt for every year of qualifying service, for up to five years, which means that the maximum amount of forgiveness would be $50,000, in contrast to the unlimited amount under the current rules. Although this may be bad news for borrowers who were hoping to get more than $50,000 forgiven tax-free, the proposed plan allows up to five years of prior national or community service to count towards PSLF.
Private Student Loan Discharge
It has generally been very difficult to get student loans discharged in bankruptcy.
Biden has promised to enact legislation from the Obama-Biden administration to permit the discharge of private student loans in bankruptcy.
Tuition-free colleges and universities
The Biden Plan also includes ideas for reducing the need for some students to take out student loans in the first place. The plan proposes making public colleges and universities tuition-free for all families with incomes below $125,000. These tuition-free colleges and universities would include community colleges and state colleges and no private colleges, except for private Historically Black Colleges and Universities (HBCU) or Minority-Serving Institutions (MSI). Only tuition and related expenses would be free. Students and their families would still pay for other expenses, such as room and board.
Again, these plans will not become law unless approved by Congress. But it’s good to keep track of the changes in the law that may affect your student loans and repayment strategy. If you need help coming up with a strategy, contact a professional with student loan expertise for help!
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Saki Kurose is a Certified Student Loan Professional (CSLP®) and a candidate for the CFP® certification. As an associate planner at Insight Financial Strategists, she enjoys helping clients through their financial challenges. Saki is particularly passionate about working with clients with student loans to find the best repayment strategy that aligns with their goals.
-
Trump Targets Student Loan Forgiveness: Here’s How Taxes and Repayment Could Soon Change
Student Loans The so-called One Big Beautiful Bill and the Trump administration’s executive action are making the future of student loan forgiveness and its tax consequences uncertain.
-
California, South Florida, Long Island, New Jersey: The Places People Are Leaving in Droves in 2025
Skyrocketing costs and shifting priorities mean people are packing up and leaving some cities and states in droves, while others are flocking to more affordable or lifestyle-friendly destinations.
-
I'm a Financial Strategist: This Is the Investment Trap That Keeps Smart Investors on the Sidelines
Forget FOMO. FOGI — Fear of Getting In — is the feeling you need to learn how to manage so you don't miss out on future investment gains.
-
Can You Be a Good Parent to an Only Child When You're Also a Business Owner?
Author and social psychologist Susan Newman offers advice to business-owner parents on how to raise a well-adjusted single child by avoiding overcompensation and encouraging chores.
-
How Advisers Can Steer Their Clients Through Market Volatility (and Strengthen Their Relationships)
Financial advisers need to be strategic when they communicate with clients during market volatility. The goal is to not only reassure them but to also help them avoid rash decisions, deepen your relationship with them and build lasting trust.
-
The Hidden Costs of Caregiving: Crisis Goes Well Beyond Financial Issues
Many caregivers are drained emotionally as well as financially, leading to depression, burnout and depleted retirement prospects. What's to be done?
-
Cash Balance Plans: An Expert Guide to the High Earner's Secret Weapon for Retirement
Cash balance plans offer business owners and high-income professionals a powerful way to significantly boost retirement savings and reduce taxes.
-
Five Things You Can Learn From Jimmy Buffett's Estate Dispute
The dispute over Jimmy Buffett's estate highlights crucial lessons for the rest of us on trust creation, including the importance of co-trustee selection, proactive communication and options for conflict resolution.
-
I'm a Financial Adviser: For True Diversification, Think Beyond the Basic Stock-Bond Portfolio
Amid rising uncertainty and inflation, effective portfolio diversification needs to extend beyond just stocks and bonds to truly manage risk.
-
I'm a Retirement Psychologist: Money Won't Buy You Happiness in Your Life After Work
While financial security is crucial for retirement, the true 'retirement crisis' is often an emotional, psychological and social one. You need a plan beyond just money that includes purpose, structure and social connection.