09/17/2020

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Here’s What a Biden Presidency Might Mean for Your Finances



In our efforts to bring you the latest updates on things that might impact your financial life, we may occasionally enter the political fray, covering candidates, bills, laws and more. Please note: SoFi does not endorse or take official positions on any candidates and the bills they may be sponsoring or proposing. We may occasionally support legislation that we believe would be beneficial to our members, and will make sure to call it out when we do. Our reporting otherwise is for informational purposes only, and shouldn’t be construed as an endorsement.



The field of Democratic hopefuls in the 2020 presidential race is large, but former Vice President Joe Biden is one of the most recognizable. Like other candidates, his platform is robust and complex, covering issues that range from ending gun violence to legalizing marijuana to international diplomacy.

And while those (decidedly divisive) topics are the ones that often make the headlines, Americans are also concerned about what the next four years could mean for their wallets. The candidates’ positions on finances, investing, and student loans are just as important—and maybe even deal-breakers.

So how could a Biden seat in the Oval Office affect your bottom line? Most political analysts seem to agree that Biden leans more to the center of left than his challengers on many issues, including the trending debate over student debt. Here’s where he stands on four key financial issues: minimum wage, taxes, health care, and student debt.

Biden On: Raising the Minimum Wage


Biden is among the majority of candidates who propose raising the federal minimum wage to $15—almost double its current rate of $7.25 (where it’s been since 2009.) It’s a controversial topic, with proponents saying the increase will help create jobs and stimulate the economy, and opponents fearing that it could hurt small businesses and lead to layoffs.

Despite the debate, however, it’s an idea that’s already gaining momentum: several states and cities have already raised their minimum wage to $15 or higher, and the Democratic-controlled House of Representatives passed a bill in July authorizing the federal increase.

For Biden, the minimum wage is both a financial and philosophical issue. “There used to be a basic bargain in this country that when you work hard, you were able to share in the prosperity your work helped create,” he says on his campaign site . “It’s time to restore the dignity of work and give workers back the power to earn what they’re worth.”

What might it mean for your finances?


If you’re currently working a minimum-wage job, it could mean bringing home twice the hourly pay. (No one needs a calculator to understand that benefit.)

For small business owners, however, it could lead to an increase in prices in order to cover the additional labor costs. However, it may be worth keeping an eye on major companies, such as Walmart, Target, Amazon, and McDonald’s, who are some of the country’s largest employers, leading the path toward higher wages.

Biden On: Health Care Premiums


As Vice President during the passage of the Affordable Care Act , Biden (in)famously told President Barack Obama “This is a big f—ing deal! ” As a presidential candidate, he plans to continue that enthusiasm by improving the ACA, but also by expanding it to include a public option that he says would reduce costs for both patients and small businesses. His plan also includes a premium tax credit for middle-class families to help them pay for coverage.

According to Biden’s plan outline , a family of four making $110,000 with insurance through the individual market would have their premiums capped at 8.5% of their income, saving them around $750 a month vs. the current 9.86%. Families under their employer’s health insurance who could get a better deal on the individual market would be allowed to switch.

What might it mean for your finances?


To echo the VP’s original expletive, the chance for all Americans—regardless of employment—to enter the individual marketplace could be a big deal for not only patients, but employers, too.

If you’re a small business or solopreneur who purchases insurance is through an ACA marketplace, you could be looking at a significant decrease in your health-care premiums. Analysts say that larger employers, however, could be looking at major changes in the way they structure their healthcare plans to employees.

If healthcare stocks are a part of your portfolio, it’s important to note that the potential sweeping changes have made some investors nervous because, as the New York Times reported , a public option (or the more extreme Medicare for All plan touted by other Democratic candidates) could “profoundly unsettle the nation’s private health sector, which makes up almost a fifth of the United States economy.”

Biden On: Taxes


Biden’s plan to cut healthcare premiums by almost half is estimated to cost around $750 billion over 10 years . His plan for making it happen? A number of big changes to the current tax code.

First, Biden aims to reverse one of the tax cuts offered to the top-earning Americans as part of the Tax Cuts and Jobs Act . As it stands, households earning more than $500,000 a year pay a 37% marginal tax rate. As president, however, Biden would return that tax rate to the pre-cut 39.6% . Lower income brackets would not be affected.

At the same time, Biden proposes to increase the long-term capital gains rate for those who earn more than $1 million from its current 20% to the same 39.6%—essentially, counting it as ordinary income . That’s a huge jump, and one that might raise the hackles of those who are near the million-dollar mark.

What might it mean for your finances?


If you earn less than $500,000 a year, nothing. According to Biden’s plan, tax brackets for Americans earning less than that won’t change.

If you have a long-held stock portfolio that reaches seven figures, however, you could find yourself with a much higher tax bill. Some analysts anticipate this could initiate a lock-in period for stocks, which could slow trading.

Biden’s tax plan also takes aim at payroll taxes. If you have a traditional employer, you typically split these taxes, including 12.4% for Social Security up to the wage cap of $132,900, and 2.9% for Medicare on all wages.

If you work for yourself, you pay all 15.3%. In order to help preserve Social Security, which is predicted to run out in 2034 , Biden would eliminate the wage cap on the Social Security portion of the payroll tax.

What might it mean for your finances?


Here’s where Biden’s payroll tax plan could possibly take a chunk out of your income. Removing the wage cap means you’d be paying a 6.2% Social Security tax on every dollar earned. For earners who make more than $132,900, it could equal a noticeable tax hike.

Biden On: Student Debt


The headlines you’ve likely seen around the 2020 election and student debt highlight some candidates’ plans to outright cancel all of it, to the tune of $1.6 trillion . But, like some of his other proposals, Biden’s approach to student debt is more conservative, with a focus instead on providing free education and improving the country’s loan forgiveness program.

Biden, who has said that he faced $280,000 in student loan debt after putting his three children through undergraduate and graduate school, is a strong proponent of fixing the Public Service Loan Forgiveness (PSLF) program.

Designed to forgive the balances of borrowers who meet certain qualifications, including dedicating years of their careers in qualifying public service professions, loan forgiveness in theory may be a solid idea. The reality, currently, is that of the around 110,000 applications for PSLF received since the program started in 2017, over 100,000 of them were rejected .

Although Biden’s plan isn’t heavy on details, he has said that he wants to “fix and simplify ” the program, especially to the benefit of teachers and other public-service workers.

What might it mean for your finances?


Potential improvements to PSLF could include more ways to qualify for student loan forgiveness, a streamlined application process, or a higher approval rate. Keep in mind, however, that the program is only for federal student loans.

In conjunction, Biden has campaigned on lowering borrower’s monthly payments based on their current income. As it stands, borrowers on one of the government’s income-driven repayment plans pay 10-20% of their discretionary income toward student loans.

Biden would reduce that amount to 5% for borrowers who earn more than $30,000 per year. Less than that, and he says payments should not be required and interest should not accumulate.

Finally, Biden’s campaign also promises two free years of community college. It’s a view shared by several other candidates, but likely spurred for him by his wife, Dr. Jill Biden, an English professor at Northern Virginia Community College.

What might it mean for your finances?


If you’re just starting out and earning less than $30k a year, Biden’s plan could bring welcome relief while you build your career. Unlike traditional forbearance or deferment, interest wouldn’t continue to accumulate on your federal student loans if you make under $30,000 annually.

On the downside, however, the principal balance would stick around. And as soon as you cross the $30,000 threshold, interest would start to build.

And free college? Well, that’s money in the bank.

Keep in mind that no matter how good a candidate’s plan sounds for your wallet, it’s still—for now—just a potential plan. And until the day that any changes actually come to pass, student loan refinancing can be one viable way to help manage your debt.

SoFi offers student loan refinancing with no application or origination fees and access to complimentary member benefits like career services, financial advisors, and more.

Find your rate with SoFi in just two minutes.

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