‘Most relief for most people’: Senator Warren’s plea to erase $50,000 in student debt
Senator Elizabeth Warren may have entered politics as a Harvard law professor, but his case for a massive elimination of up to $50,000 in debt for the 45 million American student loan holders is deeply rooted in a different discipline: mathematics.
“It wasn’t just a random number — it was a number to give most people the most relief,” the Massachusetts Democrat and 2020 presidential candidate told me in a phone interview Wednesday, making the race between votes on a busy day on Capitol Hill.
With his trademark professorial patience and ever-backed by data, Warren argued for a massive assault on the $1.75 trillion college debt bomb in the United States, which would amount to far more than $10,000 per person. . trial balloon launched by Team Biden – but also not the total debt relief supported by some activists.
Warren said that of the various options, eliminating $50,000 per person had the best results in reducing one of the worst aspects of the student debt crisis: his role in widening America’s growing wealth gap between whites and African Americans, as the latter have been hit harder by college loans. The senator said writing off debt at the $50,000 level reduced the wealth gap between blacks and whites by 27 percentage points — three times the rate if just $10,000 per borrower were forgiven, as some members of the Biden administration have advocated it.
But Warren also said that with debt relief at a level above $50,000, “the numbers are rolling” – meaning, basically, you’re taking on too many medical or law graduates who have borrowed large sums knowing that they would earn the future income to pay it back relatively painlessly. The goal, she explained, is not to forgive the debts of “partners on Wall Street or plastic surgeons, who are going to do just fine.”
For Warren, who since running for the White House has been one of the leading voices in Washington for the radical elimination of college debt, the goal is not to bail out those doctors and negotiators, but rather the people who constitute the largest number of recipients of distressed loans. : middle-class people, many of whom don’t have a bachelor’s degree, and many have been pressured to borrow far more than they can repay with their current jobs.
“The need to forgive student loan debt is huge, and it starts with who is carrying that debt,” Warren said. “It’s the hard-working, middle-class and working-class people who are trying to get an education and aren’t born into families who can afford to write a check for it.”
Warren was eager to talk to me because the issue of college debt relief, which has prevented many young adults from buying or renting their own homes or even get married, quickly reached its climax. Although all loan repayments have been suspended since the start of the pandemic in early 2020, President Biden – who pledged at least $10,000 in individual debt relief during his campaign – is expected to take action by now. the second half of the summer to eliminate part of the debt burden of $1.75 trillion.
Last month, administration sources leaked to The Washington Post — but quickly retreated from – the $10,000 per person plan which would also be ‘means-tested’ to ensure that a small percentage of the highest earners would not benefit. Although this plan would completely eliminate the debt of more than 10 million Americans, critics say its overall relief of about $300 billion would barely dent the overall problem. With a final decision seemingly still to be made, Warren and his allies — including Senate Majority Leader Chuck Schumer and another left-wing icon, Senator Bernie Sanders — push hard for a much larger number.
Warren’s weapon in this fight is data. She wants more Americans to understand that about 42% of debt holders don’t even have a license — sometimes because they borrowed for other kinds of job training, but often because of the stress of trying. to complete a four-year degree in today’s environment. . They “tried college but life happened – a pregnancy, or they already had two jobs and couldn’t keep up with classes, or their mother got sick. [and] they moved to another city,” she explained.
But of the remaining 58% who have earned college degrees, many still struggle to earn enough to repay the large sums they have been forced to borrow in an era of skyrocketing tuition fees. This is especially true, Warren noted, for young people who have attended for-profit universities, including the more fraudulent versions — like Corinthian Colleges, where Biden just faded all $5.8 billion in unpaid debt – where students were forced to take out maximum loans for degrees that had little value in the job market. Many for-profit schools, Warren said, “got caught up in simple fraud.”
READ MORE: How Biden got Penn, the Ivies, student debt and America’s ‘college problem’ wrong | Will Bunch
But misinformation about the nature of the student debt crisis remains rampant. I agree with Warren that most of this bad information is being spread by Republicans “because they understand that student debt forgiveness is widely popular.” But I would add that sometimes the GOP gets help from Democrats like Biden, who at a February 2021 town hall denounced $50,000 debt relief per student, saying it would help “people who went to Harvard and Yale and Penn.”
Coincidentally, Warren noted in our interview that only 12% of Penn students take out loans — well-endowed Ivies tend to offer more direct scholarships — while that figure rises to 51% for state-backed Penn State. and a whopping 89% for Lincoln University, a historically black school. She said these disparities help explain why 6% of white borrowers still owe money after 20 years, but the figure is 95% for black loan recipients. She dismissed criticism that canceling student debt would disproportionately help the wealthy, noting that labor groups like the AFL-CIO and the Teamsters support his plan.
The reason is clear: higher education, and the promise of a better life, remains the American dream for the entire middle class. Indeed, I pressed Warren on what could be done, even with large-scale debt cancellation this summer, to address the fundamental problem of lack of affordability and access to universities – a frequent theme in this column. as well as my new book which comes out in August — which caused the current crisis.
The senator argued that the Biden administration should also implement income-contingent debt repayment in the future, so that future debt repayment is based on graduates’ actual income, as opposed to the current mismatch between loan amounts and actual paychecks. But she also pleaded for what seems to me to be the most natural – albeit politically heavy – solution: that Congress and state legislatures – which sharply cut direct aid to higher education after the 2008 financial crisis – are once again funding higher education in the public sector.
“Remember that Congress passed the GI bill after World War II and the consequence of that was not only good for all the people who were able to enjoy going to college without going into debt – it was also good for our economy as a whole,” said said Warren. “Most of the post-war boom is attributed to having a whole cohort of better educated people who could fill the jobs of the 20th century, so it’s an investment in our future.”
In other words, as I pressed on the one change that could make all the difference in modern American life, should higher education be a public good?
“Yes!!” Warren exclaimed, while his publicist reminded him that our time was over. “Yes Yes Yes!”
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