Biden has big plans for student debt relief—here are 3 possibilities to look for in 2021 and beyond

December is likely the last month that federal student loan borrowers can take advantage of interest-free forbearance on their loans. With President-elect Joe Biden taking office in January, it's not yet clear whether the payment moratorium from Trump's executive order will extend into 2021.

While millions of Americans brace themselves for the possibility of repayment resuming in January, many wonder if they can afford to make payments. An estimated 12 million workers will lose their unemployment benefits at the end of December, according to a recent analysis by the Century Foundation, and there's still no federal plan to provide additional stimulus.

Needless to say, student loan relief of any kind would be a huge help to many. But with just a few weeks left until the end of the year, and no clear plan for additional help before 2021, it's important to take time now to prepare for what may come next.

Most likely, we won't know anything until January, following Georgia's runoff election, which will determine who has control of the Senate, as well as Biden's inauguration.

Here are three possible student loan debt relief programs you want to watch for post Inauguration Day 2021.

Biden could choose to extend Trump's executive order, which put an interest-free moratorium on federal student loan payments.

The current executive order expires at the end December, and Biden does not take office until Jan. 20. It's likely there could be a window of time in early 2021 in which you'll have to resume payments.

What you should do:

Prepare to make your January and February student loan payments since Biden's plan is still unclear. Check with your servicer to see if your monthly payment amount has changed. Make sure to set up and/or confirm your autopay information, including your most updated banking information and payment due date. If you don't use autopay, put a reminder on your calendar a few days before your payment is due so that it's not late.

During his campaign, Biden said he would forgive $10,000 of federal student loans as part of his Emergency Action Plan for the economic recovery.

This is in addition to the widespread student loan relief plan he proposed in the Biden Plan for Education Beyond High School, which would offer $10,000 of undergraduate or graduate student debt relief for every year of national or community service, up to five years. This forgiveness program would be extended to those working in schools, government, and other nonprofit settings, and they would be automatically enrolled. The plan states that those with five years of prior national or community service will also qualify. 

What you should do:

This proposal hasn't been introduced to Congress yet, so it could be a while before we see any action.

While some politicians (including Chuck Schumer and Elizabeth Warren) are gunning for higher amounts of student debt forgiveness, even $10,000 is a considerable chunk of cash. To put it into perspective, $10,000 could be enough for down payment on a house, depending on where you live and the kind of mortgage you get. Think about your long-term goals now so you can make the most of loan forgiveness, if it does indeed become a reality.

Here's the good news: If you've been making monthly payments for years and suddenly find in 2021, or even 2022, that a portion of your student loan debt has been forgiven, you'll be in excellent shape to start saving more aggressively.

Debt payoff can actually kick-start better savings habits because over time you learn how to be consistent. It takes the same kind of skills to pay down a large balance as it does to save for retirement, start an emergency fund or reach another big savings goal. If your debt is forgiven, take those monthly payments and divert them to a savings or investment account.

The Biden Plan for Education Beyond High School also revisits our current income-based repayment models. Here's how that could look, according to the plan:

1. Individuals making $25,000 or less per year will not owe any payments on their undergraduate federal student loans and also won't accrue any interest on those loans.
2. Everyone else will pay 5% of their discretionary income (income minus taxes and essential spending like housing and food) over $25,000 toward their loans. After 20 years, the remainder of the loans for people who have responsibly made payments through the program will be 100% forgiven.
3. Individuals with new and existing loans will all be automatically enrolled in the income-based repayment program, with the opportunity to opt out if they wish.
4. Biden will also change the tax code so that debt forgiven through the income-based repayment plan won't be taxed.

What you should do:

Biden's sweeping plan could offer many college graduates a fresh start with payments equaling 5% of borrowers' discretionary income compared to the current calculation of 10%. However, until his proposal is passed in Congress, hold off on getting your hopes up. While Biden will likely get support from the Democrat-run House of Representatives, the vote is still out on whether the Republicans will maintain majority in the Senate. (We won't know the final makeup until Georgia completes its runoff elections in January.)

In the meantime, consider what you would do with extra money in the event your monthly payment is lowered. You could:

1. Keep making your normal monthly payment and get out of debt faster than you planned.
2. Make a lower, adjusted monthly payment (based on your servicer) and use the difference to pay off other debt or start saving for an emergency fund, or spend on other needs.

If you go with option number two, decide on whether you want to pay off your highest-interest debt first, or tackle your balances from smallest to large. (Learn more about how to choose your debt payoff plan.)

If you have credit card debt, consider completing a balance transfer so you can pay it off faster with temporary 0% APR. You'll pay a small fee (usually 3% of the balance), but you can save overall on interest charges.

The Wells Fargo Active Cash® Card offers 0% intro APR for 15 months from account opening on purchases and qualifying balance transfers (after, 20.24%, 25.24%, or 29.99% variable APR; balance transfers made within 120 days from account opening qualify for the intro rate and fee of 3%, then a balance transfer fee of up to 5%, $5 minimum, applies; see rates and fees). The Citi Double Cash® Card offers even more time to benefit from zero interest, with 0% intro APR for the first 18 months on balance transfers (then 19.24% - 29.24% variable APR; see rates and fees). Balance transfers must be completed within 4 months of account opening.

It's still unclear whether the president-elect has the power to wipe out student debt with a swipe of his pen, but Biden has spoken out frequently on his desire to get the student loan crisis in this country under control. While we wait for answers, take a look at your big financial picture and come up with a few possible plans to make the most of any relief that may come.