Elizabeth Warren's Student Debt Repayment Plan Reopens the Battle on How to Manage the College Crisis

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The senator and Democratic candidate for the Massachusetts presidential election this week proposed to use her tax on the wealthiest families in America to radically reorganize American higher education and give up outstanding student loans, which represent debt by credit card and car loan. His plan would prevent wealthier borrowers from getting debt relief.
But – just as when Vermont Independent Senator Bernie Sanders proposed to release tuition fees when he ran for the 2016 presidential election, or when New York Democratic Governor Andrew Cuomo returned Free tuition in his state in 2017 – Warren's plan raises questions about who will make the most of the plan and find out if taxpayers' money will be well spent.

It is difficult to please everyone with a debt cancellation plan when some people choose lower-cost colleges, incur little or no debt, or have made other sacrifices to repay their loans.

But Warren's plan would offer debt relief based on income. Households earning less than $ 100,000 per year would get $ 50,000 in loan cancellation, with the amount of relief decreasing as income levels increase, and households earning over $ 250,000 unable to claim debt relief.

Warren also wants his plan to bridge the wealth gap, compounded by student loan debt. She tries to find a middle ground between helping those who fight the most and excluding the richest Americans. A previous study had suggested that a plan to eliminate all student debt, rather than limiting income-based relief, would increase the gap in wealth.
A study published this week by researchers from the Urban Institute revealed that the amount of debt canceled under Warren's plan was increasing as household income increased, the report says, but declined for people belonging to the community. to the top income quintile.

Yet some policy experts do not believe that measuring the total dollar amount for low-income students is the right indicator for assessing whether the policy is fair or progressive.

"Regardless of the dollar amount, the existence of a debt is much riskier for low- and middle-income households," said Mark Huelsman, deputy policy director at Liberal think tank Demos.

"I think that there is an interesting debate left now on the point of knowing if progressive, it just depends on where the money goes, in relation to the impact of politics – how inclusive it is for everyone.I do not think there is a right answer, it comes down to value judgments, "added Huelsman.

Borrowers with a lower debt balance are more likely to default on their loans. According to government data, those with less than $ 5,000 in student debt account for about 35% of defaults.

Many of those who are struggling to repay their debt would probably see it wiped out under Warren's plan. According to the analysis provided by his campaign, 86% of people in the lower two income quintiles would receive a total cancellation of the student loan.

"This is a very progressive proposal.We tax the fortunes of people with more than $ 50 million in wealth to cancel the debt of 42 million low-income Americans and students." middle class, "said a Warren campaign assistant in a statement. provided to CNN.

The problem is that people in high-income households are more likely to go to university and take out larger student loans, said Matthew Chingos, director of the Center's Data and Policy Center. Education at the Urban Institute and one of the authors. of the study.

Chingos and his co-author, Kristin Blagg, also discovered that Warren's plan would achieve one of his goals, which is to reduce the gap in racial wealth. According to their report, 25% of all canceled debt dollars would go to black households, while they only account for 16% of all households that benefit from debt relief.

But a more focused approach to canceling student debt could be cheaper. Warren's campaign estimates that it would cost $ 640 billion to lighten the debt.

I have a plan: Elizabeth Warren's attack on racial inequality with her political proposals

The government already offers loan exemption plans to some students. Distressed borrowers can enroll in an income-oriented program that typically cancels the remaining debt of undergraduate students after having repaid it for 20 years or 25 years for higher debt. . Other programs provide respite for people in public sector jobs and those who attended for-profit schools that closed during registration.

Borrowers have complained about the complexity of these plans and the Ministry of Education has recently been criticized for delaying the relief of expenses for defrauded students.

If students from better-off households are more likely to go to university, Warren's part of the plan that does not involve tuition could be perceived as sending too much money taxpayers to those who do not need help. This does not exclude students from wealthy families, although it calls for spending an additional $ 100 billion over 10 years on grants for low-income students to help pay for their housing costs , food, books and babysitting.

Some form of free college has gained popularity since Sanders helped generalize the idea. Since then, several states and cities have adopted a policy of no tuition fees and 2020 candidates, among them the Meaning. Cory Booker of New Jersey, Kamala Harris of California and Kirsten Gillibrand of New York, all approved a debt-free university proposal.
Not everyone in the Democratic realm adheres to this idea. Pete Buttigieg, mayor of South Bend, in Indiana, said last month that "as a progressive, I have trouble understanding the idea." According to him, making the university free would require low-income Americans to help subsidize those who are heading for better-paying careers.

But the Progressive Change campaign committee supported Warren's plan.

"We urge all Democratic candidates to follow Elizabeth Warren's bold ideas on student debt so that our side can inspire new voters and be even better positioned to defeat Trump by 2020," said co-founder Adam Green .

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