Elizabeth Warren wants to cancel your student loan debt and make college tuition-free.
Here’s what you need to know.
Proposal: Cancel Student Loan Debt
U.S. Senator Warren (D-MA), who is also a 2020 presidential candidate, proposed Monday an ambitious student loan forgiveness plan that could benefit tens of millions of Americans. The plan would cancel student loan debt for more than 95% of borrowers, and would entirely cancel student loan debt for more than 75% of Americans with student loan debt. Warren believes that her plan would reduce the wealth gap in America and provide an economic stimulus to the middle class to increase home purchases and help start small businesses.
According to the latest student loan debt statistics, there are more than 44 million Americans who collectively owe $1.5 trillion in student loan debt. Today, according to personal finance site Make Lemonade, student loan debt is now the second highest consumer debt category – second only to mortgages and higher than credit card debt and auto loans. By 2023, 40% of student loan borrowers may default on their student loans.
Specifically, Warren’s plan for student loan debt forgiveness would:
Importantly, Warren’s plan offers no student loan debt cancellation to borrowers with a household income above $250,000, which she says is the Top 5% of earners. There would also be “phase-outs” based on income. The $50,000 cancellation amount would phase out by $1 for every $3 in income above $100,000. According to Warren, for example, “a person with household income of $130,000 gets $40,000 in cancellation, while a person with household income of $160,000 gets $30,000 in cancellation.”
Proposal: Make College Tuition-Free
Specifically, Warren’s plan for free universal free college would:”
“Student loan debt is crushing millions of families,” Warren tweeted. “That’s why I’m calling for something truly transformational: Universal free college and the cancellation of debt for more than 95% of Americans with student loan debt.” In a separate tweet, Warren wrote: “This is the kind of big, structural change we need to make sure our kids have opportunity in this country.”
How These Proposals Would Be Funded
How would Warren pay for this student loan forgiveness plan and universal free college plan?
Answer: with an Ultra-Millionaire Tax.
Warren’s Ultra-Millionaire Tax would include a 2% annual tax on the 75,000 families in the U.S. who have at least $50 million in net worth.
Warren also wants to invest an additional $100 billion in Pell Grants over the next 10 years and expand eligibility for Pell Grants to include more lower- and middle-income students.
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This content was originally published here.