Senator Elizabeth Warren has announced her latest progressive, power-to-the-people proposal that she hopes to bring to the table as Democratic presidential candidate for next year’s elections: student loan forgiveness, free tuition and fees for students enrolled in two- and four-year public colleges, and increased funding that would help cover other significant costs for low-income and minority students, including a focused effort on assisting historically black colleges.
The idea is that no American will have to maintain a full-time job in order to pay their way through high-quality, higher education, and that no one will have to choose a life of crippling loan payments over buying a modest home or starting a small business once they have completed their college degrees. In essence, Warren hopes to expand everyone’s chances of pursuing the American Dream.
The proposal will cancel up to $50,000 of existing student loan debt for people who live in households that make less than $100,000, and also offer graduated debt relief for more affluent households. Tens of millions of Americans will benefit from this proposal — about three-quarters of all people with student debt. In order to forgive the massive amount of student loan debt that the country holds collectively, the U.S. government will have to put in $640 billion. According to statistics cited by CBS, students racked up nearly $80 billion just last year.
Warren’s plan will fund this loan forgiveness through her “Ultra-Millionaire” wealth tax that she unveiled earlier this year. This tax will apply to households that have a net worth of $50 million or more, subjecting them to a 2% annual tax; today, about 75,000 households would currently be subjected to this tax. The tax is projected to raise nearly $3 trillion over a ten-year period.
To Warren, loan forgiveness is an investment in Americans that will pay for itself. Much like an economic stimulus package, it will increase disposable, investible income for lower- and middle-class individuals. The Levy Economics Institute estimated that eliminating student loan debt per Warren’s plan will raise the GDP by $1.1 trillion over the next ten years, according to CBS. It will create over a million new jobs annually by supporting the growth of small businesses, helping to lower the unemployment rate; though unemployment his currently low, Business Insider pointed out that wages are stagnant and insufficient, and that almost half of borrowers will likely default on their loans in the next four years.
Warren’s plan is a refreshing “trickle up” plan after decades of failed “trickle down” economics. “We got into this crisis because state governments and the federal government decided that instead of treating higher education like our public school system — free and accessible to all Americans — they’d rather cut taxes for billionaires and giant corporations and offload the cost of higher education onto students and their families,” wrote Warren in her Medium post announcing her proposal. “The student debt crisis is the direct result of this failed experiment.”