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Elizabeth Warren just unveiled a plan to cancel student debt for 75% of Americans

Every person with an annual household income under $100,000 would automatically have $50,000 of their student loan debt forgiven.

by Rex Santus
Apr 22 2019, 12:00pm

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Sen. Elizabeth Warren just dropped yet another bold proposal that she said would not only make undergraduate tuition free at all public colleges but also cancel student debt for 75 percent of people with loans.

Warren has already established herself as the policy heavyweight in the 2020 race, but her most recent proposal, which she released Monday morning, is the most radical plan yet to tackle the student debt crisis. Most Democratic presidential candidates support at least some form of “debt-free” college, which can mean free tuition — or simply cutting costs. Only Warren has proposed canceling a significant amount of student loans, both public and private.

Under Warren’s plan, every person with an annual household income under $100,000 would automatically have $50,000 of their student loan debt forgiven. That would immediately wipe out debt for 75 percent of the 45 million Americans with student loans and provide some sort of relief for 95 percent, according to the Massachusetts senator. For every $3 people earn beyond the $100,000 threshold, they lose $1 of the $50,000 in debt forgiven. In other words, if they make $100,003, just $49,999 of their debt will be canceled. Nobody in a household making above $250,000 a year will get student-debt relief.

The proposal would still offer federal grants to low-income students to help them cover non-tuition expenses, like housing, textbooks, and food, at universities. Warren’s plan also places an emphasis on students of color through an additional $50 billion fund for historically black universities, which she said would help close the racial wealth gap.

Warren, who described the American higher education system as a “failed experiment,” estimates that her plan would cost $1.25 trillion over 10 years, but she said the wealth tax she proposed in January could cover the entire cost. That policy would require America’s richest multimillionaires and billionaires to pay a 2 percent annual tax on their wealth, which Warren said would generate an estimated $2.75 trillion over 10 years from just 0.1 percent of U.S. households. For Warren’s plan to have any chance of becoming reality, however, Democrats would need to control Congress and the White House.

“Higher education opened a million doors for me. It’s how the daughter of a janitor in a small town in Oklahoma got to become a teacher, a law school professor, a U.S. senator, and eventually, a candidate for president of the United States,” Warren wrote in a blog post announcing the proposal. “Today, it’s virtually impossible for a young person to find that kind of opportunity. As states have invested less per-student at community colleges and public four-year colleges, the schools themselves have raised tuition and fees to make up the gap.”

Student debt in the United States has skyrocketed since 2006 and now exceeds $1.5 trillion, often interfering with millennials’ ability to buy homes, and more than 2 million people have debt that exceeds $100,000, according to the Federal Reserve. Since the first few months of Donald Trump’s presidency, Secretary of Education Betsy DeVos and Republicans have proposed ending student loan protections that could harm some of the most economically vulnerable populations in the U.S. Trump’s latest budget proposal also calls for ending student loan forgiveness programs for public employees, reducing the Education Department’s budget, cutting the options for repayment plans, and more changes that could harm borrowers.

“The result is a huge student loan debt burden that’s crushing millions of families and acting as an anchor on our economy,” Warren wrote. “It’s reducing home ownership rates. It’s leading fewer people to start businesses. It’s forcing students to drop out of school before getting a degree. It’s a problem for all of us.”

Student debt and free college have become hot-button topics for 2020 Democrats. The next-most-ambitious plan to Warren’s recent $1.25 trillion proposal is Bernie Sanders’ $47 billion plan to eliminate undergraduate tuition at public universities for families with incomes beneath $125,000. Warren signed on as a co-sponsor — along with Sens. Kamala Harris, Cory Booker, and Kirsten Gillibrand — to Bernie’s College for All Act in 2017, which also lowered interest rates and outlined new ways for people to refinance their loans.

Cover image: In this Jan. 12, 2019, file photo, Sen. Elizabeth Warren, D-Mass., speaks during an organizing event at Manchester Community College in Manchester, N.H. Warren is expected to formally launch her presidential bid on Saturday with a populist call to fight economic inequality. (AP Photo/Michael Dwyer, File)