Debt Free College: Elizabeth Warren Has Biggest Free College Plan Yet
Elizabeth Warren wants to write off the student loan debt of the vast majority of Americans who have it, and make debt-free college a reality for new students.
In a new detailed plan Monday, Warren became the first Democrat running for president in 2020 to detail a broad higher education plan to ease America’s $ 1.5 trillion student debt crisis.
Warren’s plan is unique in that it would help alumni as well as future students. The plan would write off up to $ 50,000 in student loan debt for about 42 million Americans and invest in a debt-free college for students attending two- or four-year public institutions. It also comes with a hefty price tag of $ 1.25 trillion over 10 years. Warren plans to pay with the ultra-millionaire tax it introduced in January, which would tax America’s 75,000 richest families.
The Massachusetts senator has long campaigned for student debt cancellation, but in the Medium post in which she announced the plan, Warren said the university’s affordability was personal to her. Warren wrote on attending public college for $ 50 per semester, which would be unimaginable today.
“Higher education has opened a million doors for me,” Warren said. “So the daughter of a janitor in a small town in Oklahoma became a teacher, law professor, US senator, and ultimately a candidate for the presidency of the United States.
She believes student debt – and the fear of accumulating it – prevents millions of other Americans from reaching the same potential.
What Warren’s New Higher Education Plan Would Do
Warren’s plan is unique in its scope. When Bernie Sanders and Hillary Clinton competed for the Democratic nomination in 2016, their debate on higher education largely focused on whether tuition fees at public universities should be sharply reduced – or free.
Since then, the Democratic debate has shifted to whether just covering tuition fees goes far enough. Sen. Brian Schatz (D-HI) and Rep. Mark Pocan (D-WI), this year reintroduced an ambitious debt-free college plan, which would not only cover tuition fees, but also help students pay additional fees such as accommodation and food. But this plan does not touch the over $ 1.5 trillion in existing student debt in America. And surprisingly, students with less than $ 5,000 in debt are often among the worst off because they are more likely to default on their loans.
Warren’s plan goes much further than anything that has been debated before; In addition to the substantial debt relief plan, she intends to find a way to pay not only the tuition, but other costs like housing, transportation and books.
Here’s what the scan plane would do:
- Write off student debt of $ 50,000 for each person with household income less than $ 100,000 and give “substantial debt relief” to each person with household income between $ 100,000 and $ 250 $ 000. (Those earning more than $ 250,000 would not be eligible.)
Most Americans would have their debt canceled automatically, based on federal data on their income and outstanding debt. However, Warren’s plan would also target debt relief for those less likely to be able to repay their loans. Of the nearly 45 million Americans with student debt, Warren’s policy team estimates that the plan would reduce debt by over 95% and write off student debt of over 75% entirely.
- Make two- and four-year public institutions tuition-free and expand Pell Grant funding to cover additional college costs such as accommodation, transportation, food, and books.
- Prevent for-profit colleges from receiving federal funds (including federal student loans or military benefits). These schools tend to be responsible for a large number of defaults on their loans. A majority of students attending for-profit colleges drop out within three to five years after they start paying back what they owe.
- Create a $ 50 billion fund for historically black colleges, universities and institutions serving minorities, and add more money to it over time.
Warren intends to pay for this plan, which his team says will cost $ 1.25 trillion over 10 years, this way:
- Take money from Warren’s proposed tax on American ultra-millionaires and billionaires, which includes the country’s 75,000 richest families (those with more than $ 50 million).
- Warren’s tax plan would impose a 2% annual tax on wealth over $ 50 million and an additional 1% tax on wealth over $ 1 billion.
- Warren estimates that this tax would increase $ 2.75 trillion in revenue over 10 years, which means his debt cancellation and universal education plan would cost less than half of the total revenue collected.
Warren’s plan in relation to others
While this is one of the first higher education projects to be released in the 2020 cycle, Warren is technically not the first to come up with a progressive higher education policy. In 2016, Senator Bernie Sanders (I-VT) led a national conversation about a tuition-free public college in her presidential candidacy, and Hillary Clinton ultimately adopted much of Sanders’ proposal when she won the Democratic nomination. Sanders is up and running again in 2020, but has not yet detailed an updated plan.
The Schatz and Representative Mark Pocan (D-WI) Debt Free Colleges Act would give participating states dollar-for-dollar matching funds from the federal government for the funding they provide to public schools. In return, these schools should commit to helping students pay the full cost of college without going into debt, through needs-based grants to help students who can’t afford it.
Sanders’s College for All Act would eliminate undergraduate tuition fees at four-year institutions by providing $ 47 billion per year to states that have pledged to increase their own higher education funding with 2-1 matching federal funds. Sanders proposed a tuition-free university and encouraged the refinancing of student loans. His plan was supposed to be paid for by imposing speculation fees on Wall Street on investment houses and hedge funds.
Hillary Clinton eventually broadened its plan to encompass University tuition-free when she became the Democratic presidential candidate, calling for tuition at public universities to be free for American families earning less than $ 125,000 a year.
As with the Sanders and Schatz plans, Warren’s vision calls for the federal government to partner with states that wish to invest more in their public universities and match that state investment. While other plans have been dollar for dollar, or a federal 2-to-1 match, Warren wants the federal government to provide two-thirds of the funding, making it a deal states would be hard-pressed to turn down. .
Of course, all of these plans have a catch; if states don’t want to take the money, their universities are left out of the equation. Warren hopes to get more states to join by increasing federal funding. But as the implementation of the Affordable Care Act has shown, some states will refuse to accept generous federal grants, even if they would benefit residents.
As Libby Nelson of Vox wrote, free college proposals are often criticized for not offering enough relief to the poor and being too generous to richer people who can afford to go to college first. location. Nelson wrote:
The first criticism revolves around the fact that sometimes tuition is not the highest cost in college. In community colleges, the hidden costs of attending college while working less than full time – books, food, rent, child care – are much more expensive than actual tuition. At public universities, room and board can cost almost as much as tuition.
That’s why, although many supporters of free college are concerned about student debt, cutting tuition to zero wouldn’t be enough to get rid of it. In Sweden, where tuition fees are free, students still earn around $ 19,000 in student debt while in college to pay for living expenses.
Warren and Schatz have both taken care of their plans to ensure that they target the most debt relief towards low-income students; Warren’s plan invests specifically in minority institutions and places a high priority on reducing the cost of college education for minorities.
Warren could face criticism from more moderate candidates for 2020 over the cost of his plan. But by issuing yet another detailed policy in front of his fellow Democratic candidate comrades, Warren is throwing the gauntlet on a free – and debt-free – university in a bold way.