Senator Warren Wants to Wipe Out Student Debt. Can She?

Collectively, people across the United States owe $1.6 trillion in student loans, from those associated with predatory for-profit colleges that folded abruptly before people could graduate to loans taken out by attorneys and doctors during their professional education. This debt bubble is getting bigger every year, and some people are really starting to feel the strain; over a million people default on their loans annually.

Democratic Senator and Presidential candidate, Elizabeth Warren, has a solution: Debt forgiveness.

This is not a vague, pie in the sky idea. As with many other proposals emerging from the Warren campaign, she backs it with an actual framework for implementation. She couldn’t do it alone if elected President, of course, but if she came in with a Democratic majority in Congress, it would be a pretty clear mandate to take up the ambitious policy proposals she’s floating. Student debt is such a suffocating, stressful issue for so many Americans, that this proposal is likely to be popular.

It’s not as simple as throwing out all student debt. Her proposal eliminates a flat dollar amount for people at different income tiers, phasing out entirely for people earning more than $250,000. If your household income is under $100,000, you’d be eligible for $50,000 of debt forgiveness. If you earn more than that but less than $250,000, you’d still be eligible partial loan forgiveness.

76 percent of households dealing with student debt could receive complete loan forgiveness under this scenario. 95 percent would see at least some debt reduction, even if they couldn’t eliminate all their debt. It would include both public and private loans; the federal government would forgive loans automatically, while private loans might require slightly more work.

Low-income households would obviously see the greatest benefit, and because of structural racism, that means Black, Latinx, and Indigenous households could also see a big boost, as could disabled people. While disability can be grounds for student loan forgiveness, that’s only the case in extremely specific circumstances and after a convoluted and frustrating application process.

Another group of people will also see big gains under the proposal: People who started college but didn’t graduate, incurring the expense without getting the income booster of a degree.

The benefits of this plan are considerable; obviously debt relief can be transformative for people who are struggling. It could act as an economic stimulus, which could contribute to growth, especially when paired with Warren’s plan to make free universal public higher education available.

You want to know how much it costs? About $640 billion.

Her proposal to pay for it is the “ultra-millionaire tax,” a two percent cut on wealth over $50 million, with a one percent tax that kicks in at one billion. It covers the top 0.1 percent, who already pay less than their fair share when compared to people in lower socioeconomic groups. The tax would also support her free college proposal.

Senator Warren’s track record on these issues is definitely lengthy. She’s been involved in conversations about student debt, protecting students from predatory lenders, and going after for-profit colleges throughout her career. These two policy proposals are extremely ambitious, making her stand out from the 2020 field, though other candidates are working on their own education and student loan packages, which may come up during the rapidly approaching initial Democratic debate in June.

Related at Care2

 

Photo credit: Edward Kimmel/Creative Commons

53 comments

Carla G
Carla G3 days ago

thanks

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Richard E Cooley
Richard E Cooley12 days ago

Thank you.

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Dr. Jan H
Dr. Jan Hill13 days ago

good luck with that.

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Dan Blossfeld
Dan Blossfeld18 days ago

Pam W.,
That is half the claim. The other half is that the same people that did not get the break are being asked to fund that break for others.

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Thomas M
Thomas M18 days ago

Thank you

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pam w
pam w18 days ago

Interesting, isn't it? People here are stamping all over her ideas because THEY DIDN'T GET THE SAME BREAK BACK WHEN...! Demonstrates human ''generosity,'' doesn't it?

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David F
David F19 days ago

Good question Brian, "What about the people 40 years ago who went to college when it wasn't astronomically expensive?"
https://www.usnews.com/opinion/articles/2011/11/23/why-the-government-is-to-blame-for-high-college-costs

With cheap government backed money, Colleges have a windfall to build palaces maned by tenured professors with large six figured salaries. And the students get a new car.

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Sherry Kohn
Sherry K19 days ago

Noted

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Roslyn McBride
Roslyn McBride19 days ago

Excellent idea.

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Lindi Smith
Lindi S19 days ago

go Liz !

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