WASHINGTON — Sen. Elizabeth Warren announced a plan Monday to cancel the student loan debt of tens of millions of Americans, making her the first major candidate in the presidential race to come out in favor of a large-scale student debt forgiveness plan.
Warren’s plan would entirely wipe out the debt of 75% of Americans with student loans, according to an analysis by a group of student loan experts done on behalf of her campaign. It would cancel up to $50,000 in debt for people whose household income is less than $100,000, and wipe out smaller amounts of debt for people making under $250,000. Ninety-five percent of Americans with debt would see some forgiveness under the plan, the analysis said.
The entire cost of the plan, Warren said, which would include free undergraduate tuition at public colleges, is estimated to cost $1.25 trillion over 10 years. That cost would be covered, the campaign claims, by Warren’s proposed tax on the wealth of “ultra-millionaires” — people making more than $50 million a year — and billionaires.
Warren says the student loan debt forgiveness plan would be a shot of adrenaline to the economy — encouraging home-buying by taking a financial burden off of young people. It would also help close the racial wealth gap between white and black and Latino Americans, she said, which is fueled in part by student loans. Black students default on their loans at dramatically higher rates than white borrowers.
The student debt forgiveness plan is the latest in a blitz of policy ideas from Warren. She has proposed an anti-corruption bill, universal child care and pre-K, and ideas to break up tech giants like Facebook, reform corporate governance, and preserve public lands.
Her campaign hopes that these ideas will help set her apart from a crowded presidential field where many other candidates have yet to release detailed policy positions.
Even as Democrats have increasingly embraced plans that would make public colleges free, student debt cancellation has remained mostly on the political fringe. Even Sen. Bernie Sanders, who pioneered a free-college plan during his 2016 campaign, has not said he would support canceling student loan debt. But the idea has become more popular with the progressive left: 20 House Democrats signed onto a student loan forgiveness bill in 2018, and it’s become a rallying cry of Rep. Alexandria Ocasio-Cortez.
Critics have called the idea of forgiving all $1.5 trillion in student loan debt a “giant welfare program for the upper middle class,” pointing out that it is affluent households, not poor ones, that owe the most student loan debt. Spending government money on forgiving the debt of wealthier Americans, critics have said, especially those with graduate degrees, would be a waste.
Warren’s plan tries to address those criticisms by limiting debt cancellation to $50,000 — which would likely not encompass the debt incurred by graduate degrees like law school and medical school — and by tapering off forgiveness for people with high household incomes. Those who earn more than $250,000 would not see any forgiveness under her plan.