Should student loan debt be canceled?

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Speed read

What's happening: The rising cost of education and the increasing necessity of a college degree in many professions have led to an explosion in student loan debt in the U.S. Americans now owe $1.56 trillion — a figure some experts have called a "crisis" for the economy.

Many 2020 Democratic presidential candidates have proposed measures to alleviate the financial burdens that come with higher education, measures that include free college, more favorable loan agreements and moves to rein in for-profit universities.

Sen. Elizabeth Warren, D-Mass., has proposed the most radical measure: an aggressive proposal to tackle the problem by canceling $1.25 trillion in student loan debt. The plan would eliminate up to $50,000 in loans for people making less than $100,000 and provide some assistance for anyone with an income under $250,000. Her proposal includes a plan for free tuition at public colleges and a $50 billion fund to benefit historically black institutions. The program would be funded by an "ultra-millionaire tax" on families with $50 million or more in wealth.

Why there's debate: Despite its trillion-dollar scale, Warren's proposal would directly help only 42 million people, or roughly 14 percent of Americans. Individuals who chose not to go to college, those who have already paid off their loans and anyone with a household income over $250,000 would be left out.

Although there's relatively broad agreement on both sides of the aisle that the problem of student loan debt needs to be addressed, Warren's plan represents a substantial redistribution of wealth that may prove far too ambitious for conservatives and more moderate liberals.

Some progressives have also expressed concern that it would disproportionately benefit people from upper- and middle-class families, since they are more likely to go to college or pursue expensive advanced degrees. Others argue that an investment of that size would have a greater impact if it were spent elsewhere.

What's next: Polling suggests that a significant majority of Americans believe reducing student debt is important. But support for loan forgiveness is more split along demographic lines like age and race, with young people and people of color largely in favor.

Both Republicans and Democrats have proposed more incremental bills to change the student loan system, though it appears unlikely any of them will advance through a divided Congress. The possibility of a broad student loan forgiveness program becoming a reality is almost certainly on hold until after the 2020 election.

In the short term, Warren's proposal establishes the progressive flank on a subject that is broadly important to voters, especially in the Democratic base. Whether it results in a shift to the left on the issue among her rivals in the 2020 field, or the Democratic Party as a whole, remains to be seen.

Perspectives

Canceling student debt would provide a major economic boost

"Almost no degree guarantees a decent job these days. Yet society still pushes that lie. As a result, our economy will never thrive with so many people under the boot of predatory education lending and collection." — Esther J. Cepeda, Houston Chronicle

"Indeed, student debt abolition and free college would be a win-win for the entire country. Not only would debtors get relief, academic research shows it would be a significant stimulus that might 'supercharge' the economy and help address the racial wealth gap. Money currently used to pay back loans with interest would be redirected to other goods and services." — Astra Taylor, Guardian

America needs to invest in education. Warren's policy would help

"The Warren plan is squarely on target for recognizing real threats of student debt and for-profit colleges and proposing sweeping investments in the country’s intellectual armed forces.” — Derek Newton, Forbes

"It is complicated and potentially fraught and has many specifics that will have to be more thoroughly vetted, and some groups will benefit more than others, but as a statement of values, it is clear. It is a vision that says higher education should be accessible to people regardless of race, class, or place of origin." — John Warner, Inside Higher Ed

People would be unfairly rewarded for failing to pay off their debts

"This pander will not only be incredibly costly, but it will be a slap in the face to those who have already struggled to pay off their student loans without government assistance." — Philip Klein, Washington Examiner

"A lot of people have sacrificed for years to pay back the money they borrowed — from their fellow citizens — for their education. They’d be justified in asking: If I had to pay it back, why don’t others?" — Editorial, Chicago Tribune

Freeing vulnerable people from debt would reduce inequality

"On the whole [Warren has] offered a range of options for rethinking and reforming America’s access to colleges and universities so that higher education fulfills its responsibility to level the career playing field for American students, whatever their race or family income, instead of perpetuating and even increasing inequality." — Michael Hiltzik, Los Angeles Times

"I don’t know if I’d personally place a debt-forgiveness plan like she has proposed at the very center of a left-wing agenda (the very poor could use some help first). But there are certainly much more appalling things than a transfer from the ultra-wealthy to the middle class." — Jordan Weissmann, Slate

"Ms. Warren’s proposal would, by reducing the indebtedness of minority households with student loans, significantly raise the ratio of black/​white wealth…" — Jared Bernstein, Pittsburgh Post-Gazette

The plan offers help to those who least need it

"If some politician had suggested canceling my debt, I might have signed on to the movement.

But it would have been a silly movement, one that conflated the real struggles of poor and working-class young adults with the mild discomforts of the professional class." — David Leonhardt, New York Times

"This proposal is ridiculous. It is ridiculous in a way that should be salient to progressives: People who go to college typically earn higher incomes than those who don’t. So debt forgiveness takes tax revenue — which comes from taxpayers, not from the money tree — and redistributes it to those who are relatively well-off." — Michael R. Strain, Bloomberg

"People with college degrees in the United States tend to be the most well-off members of our society. But many on the left are insistent on the notion that this group needs a bailout." — Beth Akers, New York Daily News

The plan is unrealistically expensive

"I think that even though the taxes on the wealthy are probably enough to pay for this one specific thing, you can only tap that wealth this many times. And in the aggregate, what she’s proposing is probably not feasible." — Policy expert Ben Ritz quoted by Newsweek

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