Biden Proposes Doubling Maximum Pell, Tweaking Repayment Plans, Redesigning PSLF

By Joelle Fredman, NASFAA Staff Reporter

As the race for the next president continues to heat up and the primary elections inch closer, former Vice President Joe Biden — the current Democratic frontrunner — released his plan to tackle “education beyond high school” Tuesday, which includes doubling the maximum Pell Grant award, tweaking income-driven repayment (IDR) plans, and redesigning the Public Service Loan Forgiveness (PSLF) program. 

The proposal — which would cost $750 billion over 10 years — would be paid for by new taxes on the wealthy.    

While Biden has expressed his support for free college since former President Barack Obama proposed to make two years of community college free in 2015, his newly-released plan expands free college to part-time and undocumented students. He also detailed that under his proposal, free tuition would be supported by both the federal government and the states, with the former covering 75% of costs. 

Biden’s plan also calls for expanding Pell Grant eligibility to undocumented students and  doubling the maximum Pell Grant award — currently $6,195 for the 2019-20 award year — which is, according to his website, “a level of investment experts say is necessary to close the gap between the rich and poor so that everyone has the opportunity to receive an education beyond high school, and will automatically increase the value based on inflation.” For comparison, the House and Senate bills to fund educational programs in fiscal year 2020 proposed to increase the maximum award by $150 and $135, respectively.

With regard to reforming loan repayment, Biden outlined a plan to “more than halve payments on undergraduate federal student loans by simplifying and increasing the generosity of today’s income-based repayment program.” Biden wrote that his administration would exempt borrowers making less than $25,000 annually from making payments on their loans or accruing interest on those loans. Borrowers making more than that would pay 5% of their monthly discretionary income toward their loans, and would receive forgiveness after 20 years. He also proposed that every borrower would be automatically enrolled in an IDR plan, with the option to opt out, and that forgiven debt would not be taxed.

On the issue of loan forgiveness, Biden proposed to redesign the “broken” PSLF program. The Department of Education (ED) recently released data that showed that it had rejected 99% of applications for both PSLF and a program to help borrowers who were denied for the program, Temporary Expanded PSLF (TEPSLF). Under Biden’s plan, undergraduate and graduate borrowers would receive $10,000 in debt relief “for every year of national or community service, up to five years.” Biden wrote that students working in schools, government, or other non-profit settings would be automatically enrolled in the program, and that national or community service they performed up to five years prior would qualify toward forgiveness. Biden also wrote that he would ensure that adjunct professors, depending on the time they spent teaching, would be included in the program. 

Turning to for-profit institutions, Biden wrote that his administration “will require for-profits to first prove their value to [ED] before gaining eligibility for federal aid,” and that he would revert back to Obama’s borrower defense rule — which Education Secretary Betsy DeVos recently rewrote. Biden also vowed to close a loophole with the “90/10 rule,” which has recently been taken up by the House Committee on Veterans’ Affairs. While the rule prohibits for-profits from collecting more than 90% of their revenue from federal aid programs, GI Bill benefits are not defined as federal student aid for this purpose, and are therefore considered private sources of revenue and contribute to an institution's 10% of the ratio.

Biden also wrote that he would “crack down” on private student lenders by empowering the Consumer Financial Protection Bureau (CFPB) to “take action against private lenders who are misleading students about their options and do not provide an affordable payment plan when individuals are experiencing acute periods of financial hardship.” Notably, ED in 2017 ended its data-sharing partnership with CFPB, claiming the bureau’s actions "undermined" ED’s mission to oversee the student loan program and protect borrowers. ED terminated two Memoranda of Understanding (MOUs) enacted under the Obama administration, claiming CFPB had handled complaints related to the federal student loan program, rather than directing them to ED within 10 days, as outlined. Plus, controversy has surrounded CFPB’s latest pick for private student loan ombudsman: Robert Cameron, a former employee of the Pennsylvania Higher Education Assistance Agency (PHEAA), a federal loan servicer.  

Biden’s plan also includes new funding for under-resourced institutions and efforts to tackle barriers, such as homelessness, to college completion. Read his full proposal here, and review higher education proposals from other candidates on NASFAA’s 2020 Presidential Cheat Sheet

 

Publication Date: 10/9/2019


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