FORT WAYNE, Ind. (WANE) — Since President Joe Biden was elected into office, one of his goals was to eliminate student loan debt. Wednesday night, the president addressed Congress and laid out his plan to help make college free.
“12 years is no longer enough today to compete in the 21st Century,” President Joe Biden said. “That’s why the American Families Plan guarantees four additional years of public education for every person in America, starting as early as we can.”
Andrew Pentis is a certified student loan counselor and a senior writer for Student Loan Hero by Lending Tree. His job is to help students and their families the best ways to pay for college or repay their college debt.
Since March of 2020, federal student loans are in a forbearance period which allows those with loans to temporarily stop making payments. The forbearance is scheduled to end on Oct. 1.
If Biden were to forgive a $10,000 dollar in Federal Student Loan Debt, Student Hero by Lending Tree estimates that 1 in 3 borrowers will see all of their loans wiped away. An additional 20% would see their balances cut by at least half.
Indiana ranks 27th in borrowers who would have their student loan debt completely eliminated with $10,000 dollar forgiveness. The average Hoosier has around $30,000 dollars in student loans.
Along with eliminating student loan debt, providing two years of community college for free has also been thrown into the mix. Community College also known as junior college, is typically a publicly funded school. With recent proposals, places like Ivy Tech would be free for two years.
“If you aren’t sure what you want to study as a teenager or in your 20 something you can go to one of these two-year schools, take a bunch of classes and figure out the academic path for you,” Pentis said. “President Biden is talking about making that tuition-free. That’s a huge deal.”
But making community college free does raise some concerns. If two years are offered for free, won’t institutions be overwhelmed with applicants? According to a recent study done by the Indiana Commission of Higher Education, only 59% of this class attended a certified two-year or four-year college or university.
“There’s going to be effects of this and we don’t completely understand all of them at this moment,” Pentis said. “The more details that come out the more we will know.”
With both proposals, Pentis says it’s still important to talk to a financial expert about the best savings options for your and your family.
- 529 Plan
- Brokerage Account
- Regular saving Account
A 529 plan is a tax-advantaged savings plan is a savings account that can only be used on secondary education costs. If college becomes free, students can still use the money on textbooks, housing, and other expenses.
But just become Biden has issued his plan doesn’t mean it will happen, or that it will happen anytime soon. For the free community college proposal, Biden would need the democrat House to vote yes, and then the Senate would also have to vote on the yes on this.
At any time Biden could sign an executive order on his plans. With that said it is possible Republicans could file a lawsuit that would stop the process citing Biden is overstepping his legal authority.
“Keep in mind that both of these things are really far off still so it’s really incumbent upon you and your family to make plans as you normally would whether that worrying about re-paying for student loan debt or paying for college,” Pentis said. “Don’t pin all your hopes on something coming from Washington anytime soon, go forward as we know it, and if something does arrive it will be the cherry on top.”
Since March of 2020, federal student loans are in a forbearance period which allows those with loans to temporarily stop making payments. The forbearance is scheduled to end on October 1.
Experts believe that if President Biden were to sign an executive order forgiving student loan debt he would do so around the October 1st deadline.
Also discussed during Biden’s plans, are an increase in Pell Grants and investment in Historically Black Colleges and Universities, Tribal Colleges, and minority-serving institutions.