Warren’s war on student debt

Emily Echevarria, Government Reporter

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In bright blue letters, the website proclaims, “You’ll be debt free!” One of the tenants of Elizabeth Warren’s presidential campaign has been, from the start, the elimination of student loan debt, and the Massachusetts senator unveiled her detailed plan on Tuesday, Jan 14. 

We have a student loan crisis—and we can’t afford to wait for Congress to act. I’ve already proposed a student loan debt cancellation plan, and on day one of my presidency, I’ll use existing laws to start providing that debt cancellation immediately,” she tweeted. 

According to Pew Research Center, roughly one third of adults under the age of 30 have student loan debt, and collectively, Americans owed $1.5 trillion in student loan debt as of March of 2019. 

Warren’s plan, which wipes out up to $50,000 of debt per person, would affect roughly 95% of people with student loans, and would be financed using an “Ultra-Millionaire Tax on the wealth of the tippy-top .01% of Americans.” 

The tax, which would apply to households with a net worth of $50 million or more, is a 2% tax on every dollar of net worth more than $50 million and a 6% tax on every dollar of net worth more than $1 billion. Warren estimates that this tax would affect 75,000 households and result in a revenue of $3.75 billion over the next 10 years.

“Assuming your net worth is less than $50M, you will pay $0 for it,” her website proclaims. 

Along with the financial details of the plan, Warren unveiled the trickier legal side of her idea. She plans to circumvent Congress and work through the office of the Secretary of Education, which Warren says already has the authority to cancel student debt under the Higher Education Act. 

 

The Higher Education Act gives the Department of Education the ability to modify, compromise, waive, or release student loans,” Warren’s plan says. “This authority provides a safety valve for federal student loan programs, letting the Department of Education use its discretion to wipe away loans even when they do not meet the eligibility criteria for more specific cancellation programs like permanent disability discharge.” 

Warren also included a letter from Harvard’s Project on Predatory Student Lending claiming that she could legally use the executive power of the presidency to go through with this. The letter states that the plan is a, “lawful and permissible exercise of the Secretary’s authority under existing law.”

Warren immediately faced intense skepticism over whether the Office of the President has the power to enforce such a wide-reaching plan. Florida Senator Rick Scott  said in a tweet that the plan is, “a fairytale that would just make the underlying problem worse.”

 

Texas Senator Ted Cruz also hit back against Warren, saying, “Which clause of the constitution gives a president the authority to give away a trillion dollars without Congress?” 

“Follow the constitution and don’t be a dictator,” he continued. 

The plan to cancel out existing student loan debt is a part of her much larger goal to make education more affordable. Her campaign for the presidency also centers on providing universal tuition for free for all public 2 year and 4 year colleges, increase Pell Grant funds, banning for-profit colleges, and addressing racial disparities within the financial aid system. 

If we want to achieve the kind of big, structural changes that will make our education system, our economy, and our society work for everyone, we’re going to need to use every tool, every scrap of opportunity that comes our way, to help working families,” said Warren.

“The future of our economy and the lives of a generation of student loan borrowers are at risk, and I’m committed to seeing this fight through no matter what.”

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