In the wake of Sen. Bernie Sanders (I-Vt.) suspending his presidential campaign, effectively clearing the path for Joe Biden to clinch the Democratic Party’s nomination, the former vice president has put forward a number of student debt relief policy proposals aiming to appeal to the party’s left wing.
The plan, released Thursday, goes on to explain, in a pitch to progressives, that it borrows from Sen. Elizabeth Warren’s (D-Mass.) proposal of immediately canceling a minimum of $10,000 in debt for student loan borrowers dealing with the COVID-19 outbreak.
Additionally, the proposal would aim to forgive federal student debt “relating to the cost of tuition currently held by low-income and middle-class people for undergraduate public colleges and universities, as well as private Historically Black Colleges and Universities (HBCUs) and private, underfunded Minority-Serving Institution (MSIs).”
Biden also proposed forgiving all undergraduate tuition-related federal student debt from two- and four-year public schools for debt holders earning up to $125,000, with a phase-out for those earning more than $125,000, though he did not explain how debt related to tuition would be calculated.
The widespread forgiveness comes in addition to Biden’s previous proposals related to student loan debt, including that individuals earning less than $25,000 per year would not have to make monthly payments and would accrue no interest on their federal student loans, and that those making over $25,000 per year would not be required to pay more than 5% of discretionary income toward payments.
Biden has also proposed that, after 20 years of student loan repayment, any remaining federal student loans would be forgiven without any tax burden. Currently borrowers enrolled in certain income-driven repayment plans can have their remaining debt forgiven after 20 or 25 years, though that forgiveness would be considered taxable income.
Biden proposed paying for the debt relief plan by repealing “the high-income ‘excess business losses’ tax cut in the CARES Act,” saying the tax cut “overwhelmingly benefits the richest Americans and is unnecessary for addressing the current COVID-19 economic relief efforts.”
He added that he plans to release more information on the plan in the future.
“But I believe that as we are being plunged into what is likely to be one of the most volatile and difficult economic times in this country’s recent history, we can take these critical steps to help make it easier for working people to make ends meet,” he said.
NASFAA will provide additional analysis of the proposal when more information becomes available.
Publication Date: 4/10/2020