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About 70% of Borrowers Expect Biden Administration to Help With Student Loan Debt Crisis
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A sharp 70% majority of student loan borrowers say they believe the administration of President Joe Biden will provide some sort of student debt relief that creates a “somewhat” or “very” positive impact, a new Student Loan Hero survey finds.
The result is dramatically different from a similar survey we did in January 2017, when only 19% of student loan borrowers expressed the same optimism as the Trump administration took office. A key reason behind the difference is Biden’s stated support for student loan forgiveness and promises to extend the student loan interest freeze.
Here’s what our sample of 2,051 U.S. adults had to say about their hopes and expectations for student loan policy from the Biden administration.
The vast majority of student loan borrowers (almost 70%) expect to benefit from Biden’s student debt policies, with just 15% of respondents predicting a negative impact, and 16% expecting no change in either direction. (Read more)
Nearly 1 in 4 borrowers believe all of their debt will be forgiven during Biden’s four-year term, though non-borrowers aren’t as hopeful. (Read more)
About 42% of consumers support tuition-free community college, making it the most popular of Biden’s higher education-related campaign proposals. This includes the support of 31% of respondents who identify as Republican. (Read more)
The previous administration has seen some criticism for how it’s dealt with the student loan crisis — for example, some panned its attempt to shutter the popular Public Service Loan Forgiveness Program (PSLF), even though extensions to the repayment pause due to the COVID-19 pandemic proved popular.
By contrast, however, hopes are running high for aid from a Biden presidency, at least at this point.
On the campaign trail, Biden highlighted a number of borrower-friendly initiatives, including annual payouts under PSLF and full forgiveness for public college graduates from lower-income families. In light of the pandemic, Biden has also supported wiping away $10,000 in debt for all federal student loan borrowers.
More than 6 in 10 borrowers told Student Loan Hero they believed their life would be “significantly” improved if Biden reduced their student debt by $10,000. And it’s not hard to understand why: For 55% of these borrowers, a $10,000 discharge would extinguish their entire debt load.
But even respondents carrying higher loan balances noted their monthly payment would decrease, easing their budgetary constraints.
Only 9% of borrowers said they wouldn’t be impacted, mainly because a $10,000 dose of relief wouldn’t make a dent in their much higher balances.
The average Class of 2019 graduate finished school with $29,900 in loans, according to our student debt statistics. A $10,000 dose of forgiveness would cut that debt by just over one-third.
Nearly 23% of student loan borrowers said they believe they’ll become debt-free at some point during Biden’s four-year term.
Respondents not carrying student loan debt were far less bright-eyed: Only 15% of former borrowers — and just 10% who have never had student loans — shared the same sentiment.
Out of all respondents, 70% predicted at least some chance of full debt cancellation under four years of Biden as president. And still more (80%) said there’s at least some chance of partial debt cancellation.
Unfortunately, this optimism could be misplaced. Although Biden has called on Congress to include the $10,000 relief as part of another relief package, it remains to be seen whether the narrowly divided Congress, where Democrats have a thin majority, will be able to pass such legislation.
Instead, some leading Democrats have urged the Biden administration to forgive $50,000 of student loan debt per borrower unilaterally, via an executive order. Harvard Law School has stated this would be well within presidential powers, though previous Trump administration lawyers disagreed, according to internal memos reviewed by the Wall Street Journal.
While student loan forgiveness draws the most attention, it’s not the only policy initiative generating discussion.
Overall, 42% of respondents said they would support the government sponsoring two years of tuition-free community college, and 37% would back tuition-free four-year college for families with incomes below $125,000.
Somewhat smaller numbers of those surveyed also liked the idea of expanding the Pell Grant program and improving financial aid programs for students attending Minority-Serving Institutions (MSIs).
Perhaps not surprisingly, current student loan borrowers were more likely to embrace these proposals than peers who didn’t currently have education debt.
Nor is the broad support for tuition-free college unexpected. A LendingTree survey conducted in February 2020 found that a plurality of Americans think tuition-free schooling would do more to solve the student debt crisis than mass forgiveness would.
In fact, before the pandemic struck, Biden’s higher education platform was more focused on free community college rather than debt forgiveness. And it’s a plan that seems to have at least some bipartisan support, as 31% of respondents who identify as Republican were in favor, along with 53% of Democrats.
Beware: Waiting on government isn’t a student loan strategy
Whether you’re a student loan borrower intrigued by forgiveness or a student (or parent) attracted to the idea of tuition-free college, remember that both proposals have a long way to go before being passed into law.
With political parties known to posture before reaching an eventual compromise, there’s no telling when — or if — you might receive the higher education relief you crave.
Instead of waiting for things to improve, set a path forward given the options available to you today.
If you’re a student loan borrower…
Contact your federal loan servicer or private lender to ensure you fully understand your repayment options. If you need to pause or reduce your payments temporarily (after the repayment moratorium ends), ask about ways to do this.
If you’re striding along in repayment, on the other hand, you might research ways to optimize your payments, such as by lowering your interest rate through student loan refinancing.
If you’re looking to avoid student loans…
Consider your school choice first and foremost. Regardless of whether the Biden administration or Congress covers the tuition bills at community colleges, chances are likely that the two-year campus in your backyard is the most cost-effective college option — and it could still serve as a springboard to your preferred university by year three.
Once you’re building your college list, consider all the ways to pay for school that don’t include borrowing. You should exhaust the search for scholarships and state grants, for example, before even considering taking out education debt.
By planning with current resources in mind, you can make the best possible decisions for your future. And if additional aid like debt forgiveness or free college truly become reality, well, you’ll be better off then too.