Joe Biden’s Plan to Reduce College Costs Candidates’ Free College Plans

Written by: Reyna Gobel
Updated: 3/31/21

There’s a lot to be excited about if Joe Biden’s plans go through: free community college (especially for workforce programs), increased Pell grants, and a simplified FAFSA process.

Here’s what you need to know about their plans and the resources students have available to them now:

Joe Biden: Free Community College for All

Biden believes the best way to cut the cost of college is to give American students two tuition-free years at a public community college. Biden proposes doing so through a federal-state partnership where the federal government will contribute 75 percent of the needed funds to states—or 95 percent to Native American Tribes. The plan also includes students from families earning less than $125,000 to attend 4-year public schools without paying tuition.

Less Likely: According to Harnisch, this will be difficult even with the wins in Georgia because of the large expenses involved and closely divided chambers. There could, however, be opportunities for less sweeping measures to help with college affordability, but even those could be challenging with the polarized political environment in Washington right now.

More Realistic: More workforce training programs that will be paid for with federal grants.
Sometimes the funding comes from a private-public partnership from companies who need the workers to have different training. Other times, it is government-funded. If your child or yourself is considering returning to school for a trade, check with the community college in your area about workforce programs.

The good news on both workforce training and other community college programs is that community colleges offer the opportunity for republicans and democrats to work across the aisle since they are universally popular.

Wesley Whistle, New America Senior Advisor for Policy and Strategy, warns that past programs that were too short were unsuccessful.

“Existing short-term programs often leave students earning subpar wages, sometimes less than the average high school graduate, and that’s regardless of the amount of debt they incur,” says Whistle. “We can’t lower the bar and send low-income students to extremely short programs when there is no evidence they offer a financially secure future.”

It’s very important that financial aid requirements don’t dip below the current 16-week minimum for getting financial aid.

Larger Pell Grants

Pell Grants, a federal grant program awarded based on financial need, can be used for dual enrollment for high school students taking college courses—an expansion of an experiment of the Obama Administration.

Biden’s plan for Pell Grants to be used for dual enrollment is especially helpful for students who don’t intend on going to community college after high school graduation. Thus, they can still reap the benefits of using federal dollars to reduce college costs. This part of the program is based on financial need because of its link to the Pell Grant.

Warning: Don’t count on any policy until it becomes official. Even laws that are passed by congress still have a bureaucratic process to go through to define details.

Ways the Government Currently Reduces Paying for College Costs

Currently, there are multiple state and federal programs that help with paying for college from state grants to federal tax credits that are offered to most middle class families.

Here are just a few of the options your family can use to help pay for college:

American Opportunity Credit

The American Opportunity Credit is a federal tax credit that offers up to $2,500 back on tuition and fees, as well as required textbooks and supplies.

Currently, this credit would help families attending both public and private colleges with college costs for the first four years. It’s available for families with Modified Adjusted Gross Incomes (MAGI), your income minus specific deductions, of $80,000 or less for a single person and $160,000 or less for a married couple filing jointly. A reduced amount is available if you’re within $10,000 above these amounts.

The tax credit is applied to yours or your student’s first $2,000 of qualified education expenses. The other $500 can cover up to 25 percent of the next $2,000 in expenses paid.

The tax credit will not be irrelevant with the democratic candidates’ plans. However, how the federal tax credit would offset expenses differs. For private college students, nothing changes. For public college students, this credit will help with textbooks and supplies if Sanders’, Buttigieg or Warren’s plan happens. For Biden’s plan, it could also offset tuition and fees in the last two years of college.

529 Plans

529 plans, college savings plans, offer a tax advantaged way to save for college. Money is placed in an investment account with options for mutual funds, savings accounts, etc. The money grows without a capital gains tax, as long as it’s used for qualified education expenses.

Some states will also help boost your funds with state tax deductions and credits, scholarships, and matching grants. The tax deduction commonly offered by states, sets aside the money you contribute to a 529 plan as untaxable up to a limit set by each state.

For instance, if a family contributed $1,200 in a year in a state with a 5 percent tax rate, they’d get an extra $60 per year to reinvest in the 529 account. Over the course of 10 years, that’s enough to pay for a year or more of textbooks.

Because of the tax advantage, 529 plan funds cannot be used to pay for expenses you’re deducting with the American Opportunity Credit. Thus, you’d use these funds for money spent beyond the amount of the credit. After all, why turn down free money?

If the Democratic plans for free college are enacted, future 529 plan savings may be more about living expenses than paying for college itself.

Pell Grants

Pell Grants are the best-known grant program for paying for higher education. They are often miscategorized as just being just for lower-income students. However, because qualifying for Pell Grants also considers the cost of attendance, middle-class families could get some Pell Grant funding at higher-priced schools.

For the 2019-2020 school year, the maximum Pell Grant is award $6,195 with students receiving between $620 and $6,195. Next year, amounts are scheduled to increase by $150.

Students apply for Pell Grants with the Free Application for Federal Student Aid (FAFSA). The best part about filling out the form is it’s also the first step to applying for state and university