Personal finance

Biden proposes to make community college tuition-free and reduce student loan bills

Democratic 2020 U.S. presidential candidate and former Vice President Joe Biden reacts during a campaign Community Event at Keene State College in Keene, New Hampshire, U.S., August 24, 2019.

Elizabeth Frantz | REUTERS

Democratic presidential candidate Joe Biden released his higher education plan on Tuesday, proposing to make two-year community colleges and other training programs tuition-free.

Under Biden’s plan, many student loan borrowers would see their monthly payments reduced. Currently, those enrolled in income-driven repayment plans pay between 10% and 20% of their discretionary income. Biden says he would require them to pay just 5%.

And those who earn $25,000 a year or less won’t have to pay anything. After two decades, borrowers will have their loans forgiven tax-free.

The former vice president has walked back from his previous position that all four years of public college should be free. His proposal is also far narrower than that of his rivals on the left, Sens. Bernie Sanders, I-Vt., and Elizabeth Warren, D-Mass., both of whom are vowing to erase large portions or all of outstanding student debt and make four years of public college free.

Student debt has become a central issue in the 2020 campaign, as nearly a third of borrowers are currently in delinquency or default. More than half of Americans say student debt is “a major problem” for the country, according to a Politico/Morning Consult poll.

Biden would increase the reach and amount of Pell Grants, the financial aid for low-income students. He would also build on the popular but troubled public service loan forgiveness program, by forgiving $10,000 in student debt a year for up to five years for borrowers who work for the government or a nonprofit.

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