Sen. Elizabeth Warren wants to use taxpayer money to “cancel” hundreds of billions of dollars in student-loan debt and offer debt-free college for millions more, which would cost $1.25 trillion over the next decade.
In a blog post on Medium, the Massachusetts Democrat said the “huge student loan debt burden” is “crushing millions of families and acting as an anchor on our economy. 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.”
The first step in addressing this crisis is to deal head-on with the outstanding debt that is weighing down millions of families and should never have been required in the first place. That’s why I’m calling for something truly transformational — the cancellation of up to $50,000 in student loan debt for 42 million Americans.
My plan for broad student debt cancellation will:
Cancel debt for more than 95% of the nearly 45 million Americans with student loan debt;
Wipe out student loan debt entirely for more than 75% of the Americans with that debt;
Substantially increase wealth for Black and Latinx families and reduce both the Black-White and Latinx-White wealth gaps; and
Provide an enormous middle-class stimulus that will boost economic growth, increase home purchases, and fuel a new wave of small business formation.
“Experts estimate my debt cancellation plan creates a one-time cost to the government of $640 billion. The Universal Free College program brings the total cost of the program to roughly $1.25 trillion over ten years,” Warren wrote.
But Warren says “the actual costs of these new ideas are likely to be even less than that,” and claims “we can fully cover the cost of these ideas with revenue from my Ultra-Millionaire Tax on the wealthiest 75,000 families in the country — those with fortunes of $50 million or more.”
The Wall Street Journal reported that would entail “an annual 2% levy on wealth above $50 million and an additional 1% tax on wealth above $1 billion.”
The senator, who is running for president in 2020, also proposes using $50 billion in taxpayer funds for historically black colleges and universities, known as HBCUs. And she wants to “prohibit public colleges from considering citizenship status” when making admissions decisions.
In addition, Warren wants to phase out federal money that now goes to for-profit schools. “After an appropriate transition period, ban for-profit colleges from receiving any federal dollars (including military benefits and federal student loans), so they can no longer use taxpayer dollars to enrich themselves while targeting lower-income students, servicemembers, and students of color and leaving them saddled with debt,” she wrote.
Student loan debt has more than doubled over the last 10 years to $1.5 trillion, and some economic experts say that is driving the declining home ownership rates among young adults.