As the 2020 election heats up, candidates voice their proposed plans for dealing with the 44 million borrowers who owe $1.6 trillion in student loan debt today. Questions of financial balance are at the heart of the debate. Do students have the right to affordable higher education? Are taxpayers, government entities, institutes of higher education, and employers responsible for helping students to receive it? Here are some of the issues.
The idea of wiping out all, or some, of borrowers’ existing student loan debt has been proposed as a way to increase buying power and stimulate economic activity to benefit the larger economy. Some have proposed tying the amount of debt cancelled to a borrower’s income level. Questions of fairness and the costs associated with these plans remain.
Help with Debt Repayment
Debt repayment relief – and responsibility for who should provide it – is a conversation that will continue well beyond this election.
Discharging Student Loans in Bankruptcy – Several candidates, including those from opposing parties, have proposed a change that would allow student loans to be included in bankruptcy.
Loan Forgiveness – Some presidential hopefuls are calling for a restructure or expansion of Public Service Loan Forgiveness (PSLF) to provide additional relief to all federal loan types rather than just Direct Loans. Still others propose eliminating PSLF. Several states offer other types of loan forgiveness based on criteria such as working in rural areas or with underserved populations, and some candidates favor expanding these.
Changes to Income-Driven Repayment (IDR) Plans – Candidates on both sides of the aisle would like to simplify these plans. While some candidates would maintain the length of time borrowers make payments before their loans are forgiven – but would decrease the percentage of their income they would be required to pay during that time – other candidates would increase the percentage of their income slightly but reduce the number of years for repayment until loan forgiveness occurs.
More Favorable Federal Financing Options – It’s been suggested that federal student loan rates should be lower, origination fees should be eliminated, and that the federal government should not be allowed to make a profit on student loans.
Education Benefits Programs – With student loan repayment programs, employers are choosing to repay certain types of student loans as a recruitment or retention initiative for personnel. This may be explored or expanded as a way to help students with debt repayment.
The Future of Higher Education
Candidates have proposed changes to higher education itself, including how it is funded – and who bears responsibility for doing so.
Free College. While there’s been a call for free college for all, some believe it should apply just to community college, while others would restrict it based on financial need. The entire concept is unpopular with others – and there’s no federal free college program or clear vision for how that would work. Some states offer free tuition only at many public colleges; many believe extending this idea for all state and community colleges and technical schools holds promise. Plans for increasing financial aid so students don’t need to borrow to attend public college have also been proposed.
Streamlining the Free Application for Federal Student Aid (FAFSA). Many low-income and first-generation students miss out on billions in Pell Grant aid because the FAFSA is too complicated. Increasing Pell Grants to reduce borrowing and streamlining the FAFSA process could help many students access education and reduce borrowing, say some candidates.
Employer-Assisted Training and Education. Encouraging and de-stigmatizing vocational training and employer-sponsored education to reduce reliance on a traditional college education for future financial well-being is another topic that has been raised, and will continue to be explored.
Employers Assisting with Student Loan Payments
Smart businesses today can acknowledge the critical need to address student loan debt for prospective and current employees by offering a unique benefit to attract and retain them. Employers can provide student loan repayment help by offering Employee Choice or other student loan repayment options from BenefitEd. Designed to use funds employers have already set aside for 401(k) matching contributions, this benefit is offered exclusively by BenefitEd.
The Employee Choice plan allows employers to stretch their benefits budgets because they don’t have to adjust the budget they’ve already set aside for matching contributions. Employees can apply unused matching dollars to help repay their student loans – or split matching funds between student loan debt and retirement.