Democratic 2020 presidential candidate Mike Bloomberg recently released his new plan for federal student loans. His proposal would significantly increase federal spending on higher education to subsidize higher education for lower-income families. The 10-year, $700 billion plan proposes to eliminate tuition and debt for community college students and make student loan repayment more accessible. It also claims to provide student loan forgiveness for a large number of students.
Here are some things you need to know:
Tuition-free and debt-free college
Bloomberg plans to make two-year public colleges tuition-free. This adheres to many other candidates’ proposals, such as Vice President Joe Biden and Sen. Elizabeth Warren. But, it does not coincide with Sen. Bernie Sanders’s plan of making public four-year colleges tuition-free.
However, Bloomberg does plan on providing lower-income college students with a debt-free college experience. If a student attends a two-year public institution, their books, meals, transportation, and childcare will all be covered by his higher education plan.
Income-driven repayment plans
Income-driven repayment plans help you lower your monthly federal student low fees based on your income, family size, and state of residence. Though he does not support student loan debt cancellation, Bloomberg proposes to…
1. Allow for automatic enrollment, meaning borrowers will automatically be enrolled in an income-driven repayment plan.
2. Cap federal student loan repayments at 5% of discretionary income, compared to the 10% cap today.
3. Allow borrowers to have student loan payments withdrawn from paychecks.
4. Allow borrowers to receive student loan forgiveness on federal student loans up to $57,500 tax-free after 20 years. To receive student loan forgiveness, borrowers must have an annual income of less than $250,000.
5. Allow for federal student loan forgiveness if you attend a failed or predatory for-profit school.
6. Make receiving public service loan forgiveness easier for public servants.