What We Know About Pete Buttigieg’s Student Debt Plan

Pete Buttigieg had strong finishes in both the New Hampshire primary and Iowa caucus. These results have positioned him as a front-runner among democratic presidential candidates.

And considering Buttigieg and his husband carry a combined $130,000 in student loan debt, we’re eager to explore his plan for student loans.

Although Buttigieg hasn’t focused too much on student loan debt, his views and goals align with mainstream democratic principles. He’s in favor of lowering interest rates on federal loans, expanding Public Service Loan Forgiveness (PSLF), and making college more affordable.

Based on the details he’s released, Buttigieg has one of the most conservative student debt plans among leading presidential candidates. Here’s how his plan could impact student loan borrowers.

5 Major changes in Buttigieg’s student loan plan

It’s clear that Buttigieg wants to increase student debt relief, but his path isn’t as clear as some of his competitors. Although it’s also tough to do a side-by-side comparison since Buttigieg hasn’t released as many details as some of the other candidates.

Here are the main points we do know about Buttigieg’s student loan plan.

1. Build on the PSLF program

Buttigieg’s plan would expand the PSLF program in several ways. It would also make improvements to the overall management of the program. This is desperately needed considering the program’s failed implementation and 99% rejection rate among PSLF applicants.

His plan would provide public servants with earlier student loan forgiveness. It would cancel qualifying debt incrementally based on years of service — with full debt cancellation after 10 years.

Increase the number of public service jobs

He also plans to dedicate $100 million per year in new grants to state and local agencies to increase access to public service jobs. These jobs would qualify for PSLF.

Additionally, Buttigieg announced his national service plan, “A New Call to Service,” which would dramatically increase service opportunities from 75,000 to 250,000.

2. Increase Teacher Loan Forgiveness

Buttigieg intends to make teacher loan forgiveness more generous.

And though this is a great soundbite, it shows that Buttigieg may not fully understand the complexities of student loan debt.

Existing problems with Teacher Loan Forgiveness

This shows a lack of understanding since PSLF is more advantageous than Teacher Loan Forgiveness. The existing Teacher Loan Forgiveness program has strict limitations and does not assist teachers who owe more than $20,000 in student debt.

Instead, it’d be better to eliminate the Teacher Loan Forgiveness program and focus on making PSLF work better for everyone.

3. Automatic enrollment in income-driven repayment (IDR) plans

Buttigieg wants to create a new system that will automatically enroll borrowers in IDR plans. Borrowers would be automatically enrolled if they’ve fallen behind in payments or communicated that they’re struggling to make payments.

Additionally, he wants any remaining debt on an IDR plan to be canceled tax-free after 20 years of repayment.

Current IDR plans allow for forgiveness after 20-25 years. But include a burdensome “tax bomb” when loans are eventually forgiven.

4. Cancel debt for those who attended “unaffordable for-profit programs”

We don’t know the specifics of this debt cancellation plan. But Buttigieg’s intention is to hold “unaffordable for-profit” schools accountable for leaving students with lots of debt and no viable job prospects.

He also plans to reinstate gainful employment rules that were eliminated under the current administration.

These rules were designed to keep career-college programs in check by leveraging federal financial aid. Basically, they created a debt-to-income threshold to help ensure students didn’t graduate with tons of debt relative to their job earnings.

5. Refinance federal student loans to lower interest rates

Federal student loan debt is at a whopping $1.6 trillion. It is also saddled at an approximate 6% interest rate.

Buttigieg said that he supports lower interest rates for students interested in refinancing.

While he hasn’t put forth a plan for changes to interest rates, other plans out there have suggested cutting rates to approximately 3% — which could cost tens of billions of dollars each year.

Other higher education proposals

Buttigieg has outlined many other higher education proposals that could dramatically change the cost of college for students going forward. Some of these changes include:

• Making college more affordable. Buttigieg states he will make public tuition free for 80% of American families through state and federal partnerships. This would primarily benefit lower-income families earning up to $100,000 by expanding grant programs.
• Increasing Federal Pell Grant program. He plans to add $120 billion to the Pell Grant program and increase the maximum Pell Grant amount by $1,000. This increase isn’t nearly as much as Senator Klobuchar’s proposal to double the maximum amount.
• Investing in underfunded institutions. He intends to invest $50 billion in historically black colleges and universities, tribal colleges and minority-serving institutions over the next decade.

Currently, Buttigieg doesn’t support forgiving student loan debt outright. Given the costs associated with widespread cancellation, he disagrees with debt cancellation proposals by Senators Elizabeth Warren and Bernie Sanders.

Filling in the gaps

Despite the many proposals above, student loan relief isn’t at the forefront of Buttigieg’s campaign. And with so many policies to consider, we assume he would turn to his party’s leadership to hash out the details once in office.

Other legislation proposed by democrats, like the Aim Higher Act and the 2019 Senate PSLF bill, are good indicators of the changes a Buttigieg administration might align with.

Unfortunately, we can only assume he’d explore options that are popular among democratic legislators. Some popular ideas include streamlining repayment plans and eliminating the tax bomb that comes along with IDR forgiveness.

It’s clear that Buttigieg wants to do a lot in terms of making improvements to higher education. But he hasn’t done a deep dive into fixing the student debt crisis at this point in his campaign.

Buttigieg’s plan would benefit borrowers and future students

Student loan borrowers would likely save money given the details we know about Buttigieg’s plan.

But his current student loan plan for higher education aims to take a proactive approach and prevent debt. Rather than solve current borrower issues.

As his campaign progresses, we’ll hopefully get better clarity on the specifics of his plan — including how he plans to pay for these initiatives.