Democratic presidential candidate Elizabeth Warren (D-MA) on Monday rolled out a proposal to eliminate billions of dollars in Americans’ student loan debt and make public colleges tuition-free.
In a post on Medium, Warren called for the cancellation of $50,000 in student loan debt for those with a household income under $100,000. The debt relief would then phase out gradually for those with incomes between $100,000 and $250,000. The canceled debt would not be taxed as income. Borrowers with more than $250,000 in household income would not be eligible for debt forgiveness.
Warren says her plan would erase some debt for more than 95% of the nearly 45 million Americans with student loans — and would completely wipe out student loan debt for more than 75% of Americans who carry it.
“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,” the senator wrote in her post.
Warren is also proposing to eliminate tuition and fees at every public two-year and four-year college in the country. Her plan would have the federal government split those costs with states, and boost Pell Grants by $100 billion over 10 years.
Warren’s debt cancellation plan would cost $640 billion, and the free college proposal would add another $600 billion or so, bringing the total federal price tag for her education proposals to about $1.25 trillion over 10 years, she says. She noted, though, that returns on the investment will help boost the economy and lower the ultimate cost. “Experts find that my debt cancellation plan will create an economic stimulus, and study after study shows that investments in higher education provide huge returns for every dollar,” she wrote.
Warren says that the costs of the proposals would be fully covered by her proposed “ultra-millionaire tax” — an annual tax of 2% on wealth above $50 million, with an additional 1% tax on fortunes above $1 billion.