Home Gear market Here’s what a Trump or Biden plan will mean for student loan borrowers

Here’s what a Trump or Biden plan will mean for student loan borrowers

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U.S. President Donald Trump and Democratic presidential candidate former Vice President Joe Biden answer a question during the second and final presidential debate at the Curb Event Center at Belmont University in Nashville, Tennessee on October 22 2020.

Morry Gash | Swimming pool | Reuters

During the pandemic, federal student loan borrowers enjoyed a break in their monthly bills until the end of the year. As a result, many Americans are focusing on more pressing concerns, like being able to pay their rent or getting enough food on the table.

But in two months, bills will become due again, and experts predict delinquency rates will rise, high unemployment rates persist and coronavirus cases continue to rise in the United States.

The trajectory of the student loan crisis could be largely determined by Tuesday’s election results.

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Donald Trump and Joe Biden have proposed very different policies when it comes to loans, which have long overtaken credit cards and auto debt as a burden on Americans. Each year, 70% of college graduates start their lives in the red, and the average balance is around $ 30,000, up from $ 10,000 in the early 90s. The typical monthly payment is $ 400.

There is a strong desire for reform: More than half of Americans say student debt is “a major problem” for the country, according to a Politico / Morning Consult poll.

Here’s what the different perspectives of applicants can mean for borrowers.

Student loan forgiveness

As president, Biden said he would forgive the tuition-related federal student loan debts accrued at public colleges and historically black colleges and universities for those earning less than $ 125,000 a year.

It would also write off $ 10,000 in student debt for all borrowers.

Trump has not said anything about the drastic cancellation of student loans.

Monthly invoices

Trump proposed monthly payments for student loan borrowers that would represent 12.5% ​​of their discretionary income. Undergraduates would pay for 15 years and graduate students for 30 years.

Meanwhile, Biden called for setting monthly loan bills at 5% of borrowers’ discretionary income and they would be on the plan for 20 years.

Cancellation of public service loan

Biden would keep the program but make changes to it. Instead of canceling borrowers’ remaining debt after a decade, it would write off $ 10,000 per year of their debt for up to five years.

Bankruptcy protection

Right now, borrowers must show a “certainty of desperation” to write off their student loan debt in court.

Biden calls for restoration of bankruptcy protections for student loans; Trump didn’t.

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