For future students and the families of those intending to go to college, here are two additional initiatives included in the American Families Plan that could help minimize debt:
Keep in mind that no student loan forgiveness legislation has been officially presented yet, and Congress needs to approve it before Biden can sign it into law
Increase Pell Grants: Biden said during his presidential campaign that he wanted to increase the maximum value of Pell Grants so that more middle-class Americans could participate. Later in April, he called for an $85 billion investment in the award as part of the American Families Plan to “help students seeking a certificate or a two- or four-year degree.” The president’s proposal adds $1,400 in additional Pell Grant assistance (the maximum award for the 2021-2022 school year is $6,495). The White House said that roughly seven million students depend on Pell Grants to help pay for college, but the value of these grants has fallen from covering nearly 80% of the cost of a four-year college degree to under 30%.
Biden’s administration has already rolled back Trump administration rules to cancel roughly $3 billion in student loans, some from fraudulent colleges, universities and career schools
Free college tuition: While on the campaign, Biden also said that he wants to “make four-year visit the site right here public colleges and universities tuition-free for all students whose family incomes are below $125,000.” As part of the American Families Plan, the president has already called for $109 billion to “ensure that first-time students and workers wanting to reskill can enroll in a community college to earn a degree or credential for free.” Under this proposal, the federal government would team up with states, territories and Tribes to provide a free college education for roughly 5.5 million students. Biden is also asking Congress to fund a $39 billion program that offers two years of subsidized tuition for four-year HBCU, TCU or MSI students in families earning less than $125,000; and another $5 billion to expand existing institutional aid grants to those schools.
With almost one in eight Americans owing a record-high of $1.73 trillion in college loans, and the extension on student loan forbearance set to expire at the end of September, many are looking for government help to manage or eliminate their student loan debt.
The president has also said that he supports broader forgiveness for federal student loan borrowers up to $10,000, which would eliminate at least $73.8 million in loans from almost 15 million people who owe less than that amount in 2021.
Whether you are thinking about going back to college or paying for the education of a loved one, a financial advisor can help you put together a financial plan to reach your goals. SmartAsset’s financial advisor matching tool will connect you with professional advisors in your local area in just five minutes. Get started now.
SmartAsset’s free college loan calculator will help you figure out how much to borrow and how much you will have to pay back each month.
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He also presented the groundwork for some of the educational proposals that would later influence the $1.8 trillion American Families Plan. These include initiatives that support tuition-free community college and training, halve undergraduate federal student loan payments, double awards for Pell Grants and expand student loan debt forgiveness.
Bring back borrower defense payment rules: The Department of Education overturned 2019 Trump administration rules that scaled back loan forgiveness opportunities for borrowers who had been defrauded by their colleges, universities and career schools. The department said in a press release on March 18 that this was the “first step in addressing borrower defense claims as well as the underlying regulations,” and it “will be pursuing additional actions, including re-regulation, in the future.” Current guidelines mandate that borrowers prove that their school acted fraudulently, which limits eligibility for student loan forgiveness.