Biden proposes expanding free community college across the U.S.

Personal finance

Woman with hands raised in the classroom
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President Joe Biden has proposed expanding free community college across the U.S., and other initiatives to lower higher education costs.

The plans, announced Monday as part of Biden’s $7.3 trillion budget for fiscal year 2025, face slim chances of becoming law this year with Republicans in control of the House.

Still, the budget reflects the president’s policy priorities as he seeks re-election in November.

“With these investments, we can deliver an excellent education to all students, improve learning conditions, build pathways to college and careers, and increase postsecondary education affordability and access,” U.S. Secretary of Education Miguel Cardona said in a statement.

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After the Supreme Court blocked Biden’s sweeping student loan forgiveness plan in June, his administration has explored all of its existing authority to leave people with less student debt. It has now canceled debt for almost 3.9 million borrowers, totaling $138 billion in relief, through fixes to forgiveness programs that borrowers historically had trouble accessing.

The president’s budget builds on those efforts by further addressing the student loan crisis and offering more ways for people to get through their schooling without going into debt.

Biden’s presumptive Republican opponent, former President Donald Trump, called for slashing the U.S. Department of Education’s budget during his term in the White House.

In contrast, Biden is requesting additional funding for the agency — $82.4 billion for 2025, a $3.1. billion increase from 2024 — to subsidize educational costs for many Americans.

Bigger Pell Grants, fee cuts on student loans

Biden’s budget calls for increasing the discretionary maximum Pell Grant to $8,145, a $750 raise from the current level.

The federal Pell Grant program, signed into law in 1965, is one of the largest sources of financial aid available to college students. More than 6 million undergraduate students received the grants in 2020, and more than 90% of recipients come from families with household incomes below $60,000, according to higher education expert Mark Kantrowitz.

“We fully support the administration’s commitment to increasing the Pell Grant,” said Jaylon Herbin, director of federal campaigns at the Center for Responsible Lending.

“This move signifies a crucial step toward enhancing access to education for all borrowers, but especially borrowers of color in underserved communities,” Herbin said.

The president’s budget also calls for eliminating origination fees on federal student loans, and $2.66 billion to support student loan borrowers as they return to repayment, including improvements to loan servicing.

Origination loan fees range roughly from 1% to 4% of the total amount borrowed.

“[An origination fee] not only reduces the amount of loan funds applied to their college bill, but it also adds expense and confusion to the process,” said Elaine Rubin, director of corporate communications at Edvisors.

Expand free community college

The president’s budget would expand free community college across the U.S. through a federal-state partnership.

“The free community college proposal is a big development,” Kantrowitz said. Subsidized community college, he added, “will make college much more affordable for low-income students and help them transition quickly into good-paying jobs.”

In addition, Biden proposes providing two years of subsidized tuition for students from families earning less than $125,000 and enrolled in certain schools, including a Historically Black College and University and a Tribally Controlled College and University.

Biden also wants to establish a $12 billion “Reducing the Costs of College Fund,” which would create a new $7.2 billion program to provide states with matching funds to offer at least 12 free postsecondary credits to students in certain career-connected programs.

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