Presidential candidate Sen. Elizabeth Warren, D-Mass., has proposed the most dramatic student aid plan in the presidential race so far — forgiving students loans of up to $50,000 for as many as 42 million Americans.
Her plan comes amid a flurry of hugely ambitious — and expensive — proposals on the presidential campaign to leverage the power of the federal purse to bolster the nation’s education system in a variety of ways, to relieve financial burdens on students and provide a middle class stimulus to boost economic growth by increasing home purchases and fueling the formation of small businesses.
Warren’s plan, which would cost a staggering $1.2 trillion over 10 years, would be paid for by her proposed “ultra-millionaire tax” — a 2 percent annual tax on the 75,000 families in the U.S. with more than $50 million in wealth.
Just a month ago, Sen. Kamala Harris, D-CA, proposed a plan to boost teacher pay by an average of $13,500 to close the “pay gap” between what teachers and college graduates with similar credentials in other fields earn. That plan would cost $315 billion over 10 years, Harris estimated.
Warren described her plan in an article on the Medium website this week. Among its highlights her plan would:
- Cancel a significant portion of the debt for 95 percent of the 45 million Americans with student loans.
- Eliminate entirely the debt of three-quarters of Americans with student loans.
- Ensure that the canceled debt would not be taxed as income.
- Exclude students with household incomes of over $250,000.
In addition, she would create a fund of at least $50 billion for Historically Black Colleges and Universities, along with those designated as “Minority-Serving Institutions.” The fund would target the daunting statistic that black college graduates on average owe more than their original loan amount after 12 years, according to Warren.
Her plan is in addition to her previously announced proposal for “universal free college” which would “give every American an opportunity to attend a two-year or four-year public college without paying a dime in tuition or fees.”
Student debt has more than doubled to $1.36 trillion over the past decade, according to a report by the credit company Experian. Nationally, student loan debt represents “one of the country’s most significant and widespread financial burdens to date,” the report said.
California’s total student debt load has also more than doubled from $61.6 billion to $132.8 billion. While students in the state have accumulated by far the highest total debt, the increase in the debt load only puts California somewhere in the middle of the pack. Some 25 other states experienced higher increases in the total amount in loans held be students living there.
Thanks to generous aid to low-income students at its public universities, California’s students have less debt than those in many other states. But it is still substantial. The average student loan debt held by graduates of California’s four-year universities was $22,785 in 2017, according to the The Institute of College Access and Success in Oakland.
Several bills have been introduced in the State Legislature to target the student debt load, but none as ambitious as what Warren has in mind.
One bill, AB 1340, tackles the problem of students who attend for-profit colleges and are victims of “widespread misconduct or fraud.” Another, AB 140, would cover student loan payments with state funds for two years after graduation if they make less than $50,000 a year among other criteria. Yet another, AB 154, would create a pilot “income share” agreement with the California State University System allowing students to promise a portion of their future incomes in exchange for a reduction in tuition costs.
Given the thousands of bills that are introduced annually each year in the State Capitol, it is impossible to know which if any of these bills have a chance of making it through both chambers in the Legislature and then getting Gov. Newsom’s signature. But Newsom has said that reducing college costs is a high priority, so it is likely that some legislation tackling the issue will emerge during the current legislative season.
Among a range of proposals, Newsom has called for two years of free tuition at the state’s community colleges, increasing Cal Grants for college students who are also parents and for a freeze on tuition increases at the University of California and the California State University system.