Early on Monday, April 22, presidential hopeful Senator Elizabeth Warren announced an ambitious higher education plan that would include free public college, a massive student loan debt forgiveness program, funding for Historically Black Colleges and Universities, and eliminating federal funding for all for-profit colleges.
Any single one of these components would effect change in the American higher education system, but taken together, Warren’s plan would transform higher education as we know it into a completely different beast. One that actually works for students and consumers and helps build up our nation through education-for-all.
In her twitter announcement, Warren wrote, “This is the kind of big, structural change we need to make sure our kids have opportunity in this country.”
She expanded upon that sentiment in her Medium post, writing, “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.”
But there’s a big difference between saying you want to completely change a multi-billion dollar industry and actually doing it. So how would Warren’s plan work?
What Is She Proposing?
Warren has proposed a multi-prong overhaul of the higher education system to do two things:
- First, address the existing financial burden on students and former students.
- Second, create programs that will ensure a crisis like this never happens again.
And she’ll do this in several stages.
Cancelling Student Loan Debt
First and foremost: she’ll address the current student loan debt crisis. To put things into perspective, according to Student Loan Hero, “Americans owe over $1.56 trillion in student loan debt, spread out among about 45 million borrowers.” For the class of 2018, students graduated with an average of $29,800 in student loan debt, and the average monthly payment is $393. And while the case has been made for zero percent interest student loan repayment, Warren’s plan is a little different.
Per her announcement, she is calling for “the cancellation of up to $50,000 in student loan debt for 42 million Americans.”
But it’s not just a matter of wiping the slate clean to the tune of $50,000 for all student loan borrowers. Instead, her plan would cancel $50,000 of student loan debt for households earning $100,000 or less. There is also debt cancellation for households earning more money, proportionate to income level.
- For households earning between $100,000 to $250,000, her “$50,000 cancellation amount phases out by $1 for every $3 in income above $100,000, so, for example, a person with household income of $130,000 gets $40,000 in cancellation, while a person with household income of $160,000 gets $30,000 in cancellation.”
- For households earning $250,000 or above, there would be no debt cancellation.
But how would this work? Would she just wave a magic wand and, poof, debt be gone? Kind of, but in an actionable sense: using pre-existing data collected about student loan borrowers, outstanding loans, and income, the Warren plan would automatically eliminate debt. Finally, borrowers wouldn’t have to file their cancelled debt as income, which means they wouldn’t be financially punished for keeping a larger portion of their income the year the forgiveness went into effect.