Does Biden’s Student Loan Forgiveness Plan Go Far Enough?


Democratic presidential candidate, former Vice President Joe Biden speaks at Alexis Dupont High … [+]

Former Vice President Joe Biden, the presumptive Democratic nominee for President, released his student loan forgiveness plan in April, and reaffirmed his commitment to student loan forgiveness in June.

Biden’s student loan forgiveness plan goes much further than anything he offered during the presidential primary campaign, and it represents a continuing shift in his policy positions since he supported restricting bankruptcy relief for student loan borrowers in the 1990’s and early 2000’s.

But how does Biden’s plan compare to other student loan forgiveness proposals? And does it go far enough?

Biden’s Student Loan Forgiveness Plan

Biden’s student loan plan would forgive all undergraduate federal student loan debt for borrowers who attended specific educational institutions: public colleges and universities, as well as historically black colleges and universities (HBCUs) and private minority-serving institutions (MSIs). There would also be an income limit for borrowers eligible for student loan forgiveness: only borrowers who earn an income of less than $125,000 per year would be eligible for forgiveness.

Biden’s plan also provides for debt-free community college, and free college at public colleges and universities. Like his student loan forgiveness proposal, however, there would be an income limit for eligible borrowers: only families who make under $125,000 per year would be eligible.

Biden’s plan would also crack down on predatory for-profit colleges, allowing borrowers to obtain loan forgiveness if they are defrauded by these schools, which disproportionately prey on students of color. This appears to be an endorsement of the existing Borrower Defense to Repayment program; under the Trump administration, the rules governing that program have been changed to limit relief and increase the burden of proof for student loan borrowers.

Finally, Biden has expressed support for improving existing federal student loan forgiveness programs, including Public Service Loan Forgiveness. And he has indicated that he supports Senator Warren’s proposal to amend the bankruptcy code to allow student loan debt to be more easily discharged in bankruptcy.

Comparison To Warren’s and Sanders’s Student Loan Forgiveness Proposals

While Biden’s student loan proposal represents a significant policy shift for him, the plan still falls short of prior student loan forgiveness proposals offered by Senator Elizabeth Warren and Senator Bernie Sanders, who also ran for president this year.

Under Senator Warren’s plan, broad student loan forgiveness would have been available to borrowers regardless of the school they attended. Borrowers would be eligible for up to $50,000 in loan forgiveness. Eligibility would have been based on income, but the income limits were higher than under Biden’s proposal. Under Warren’s plan, borrowers who earn up to $100,000 per year would have been eligible for the maximum student loan forgiveness benefit. Borrowers who earn between $100,000 per year and $250,000 per year would have received a gradually reduced benefit. And borrowers who earn more than $250,000 per year would not be eligible to get their student loans forgiven at all. Despite these caps and restrictions, Warren’s campaign maintained that 75% of all outstanding student debt would be cancelled under the proposal, and 95% of student loan borrowers would receive at least some benefit.

Senator Sanders’ proposal went even further. Under his plan, all $1.6 trillion in outstanding federal and private student loan debt would have been cancelled, with no means testing or income qualifications.

Takeaways

Biden’s student loan forgiveness plan represents a significant policy shift for him, and shows that the concept of widespread student loan forgiveness has rapidly moved from a fringe idea to mainstream. However, his plan is not as broad as the plans previously offered by Senator Warren and Senator Sanders.

Some aspects of Biden’s plan have garnered criticism from student loan borrower advocates. For example, the Debt Collective (a student loan borrower activist organization) criticized Biden’s endorsement of the Borrower Defense to Repayment program because it requires borrowers defrauded by their schools to affirmatively apply for relief, with individual determinations to be made by officials of the Department of Education.

“If Biden is serious about redressing the racial wealth gap through student debt cancelation, he can’t leave out for-profit students from his partial cancelling plans the way he currently does,” the organization stated in a recent Tweet. “Those who have been hurt the most are currently left out. If he was really serious about this, he would cancel all student debt.”

Other organizations have also called on Congress to pass broader student loan forgiveness, without limitations based on the school the borrower attended or their income levels.

However, some policy advocates have noted that a plan like Biden’s is more likely to pass an ideologically diverse Congress. And since student loan forgiveness legislation would likely will have to originate in Congress, those considerations might prove to be critical.

Article by Adam S. Minsky