Elizabeth Warren is perhaps not the most exciting candidate in the field of Democrats looking to challenge President Trump. But she’s formulating bold proposals other candidates must react to. She’s targeting a millennial voting block with proposals like universal child care, affordable housing, and now, a plan she claims would completely eliminate student loan debt for 75 percent of all borrowers and cut indebtedness for the rest.
The plan would cancel up to $50,000 in student loan debt for every borrower with an annual household income under $100,00. The loan forgiveness amount phases out as income rises, with no family earning over $250,000 per year receiving any loan forgiveness. Still, under these limits, plenty of upper middle-class earners would qualify.
Currently, Americans owe about $1.5 trillion in student debt. Senator Warren estimates her proposal will cancel some $640 billion of it.
The Obama Administration nationalized the student loan market in 2010, in an attempt to help pay for the Affordable Care Act. It instituted income-based repayment options that cap payments and forgive balances after borrowers work for 20 years —10 if they work in “public service.”
Senator Warren suggests we wipe away nearly a third of this debt and pay for her other proposals — with an “ultra-millionaire” wealth tax, “an annual tax on the nation’s wealthiest families.”
We don’t have enough millionaires to pay for this. The taxing would reach down into the middle class even, as the Wall Street Journal warns, to “those who, say, choose to pursue a trade or work two jobs to graduate without debt.” The Journal calls this proposal, “a recipe for class resentment and a subsidy for children who attend college at the expense of those who don’t.”
College is expensive, in part because of federal subsidies and student loans.
Senator Warren’s plan would encourage more borrowing, more tuition hikes. If we ever adopt her proposal, we will find out how costly free college really is.