(Bloomberg) -- Democratic presidential candidate Elizabeth Warren’s new student-loan forgiveness plan includes specific policies that would help black and Latino students, two groups that tend to carry disproportionately high levels of educational debt.
Her proposal, which is estimated to cost $1.25 trillion over a decade, creates a minimum $50 billion fund for Historically Black Colleges and Universities and minority-serving institutions to help close gaps in per-student spending. It would also prohibit public colleges from considering citizenship status or criminal history in admission decisions.
The proposal would also require public colleges to complete an annual report identifying obstacles to enrollment and graduation for lower income students and students of color. States that showed better results would get more federal funding to support their efforts.
The policy would also help close racial wealth gaps in the U.S., according to an estimate provided to the campaign by Arizona State University assistant professor Raphael Charron-Chenier and Brandeis University law professor Thomas Shapiro.
“Gains to net worth for households of color would be meaningful under the policy, increasing median wealth by roughly $6,741 for Black households as a whole and $3,280 for Latino households as a whole,” they wrote in the analysis.
The policy would also provide greater benefits to households that “experience relatively limited benefits from higher education,” according to the analysis. The forgiveness rate would be highest (90 percent) for someone who attended college but didn’t complete a degree, followed by the rate for people who have an Associates degree (87 percent) and a bachelor’s degree (72 percent).
High levels of student debt have become a drain on the economy, said David Bergeron, a senior fellow at the liberal Center for American Progress, who worked with the U.S. Department of Education for 35 years specializing in higher education.
“It costs all of us indirectly as doctors, lawyers, veterinarians, accountants, engineers, etc. all have to be paid or charge more for the services they provide,” he said. “Student loan debt was never intended to be the way we paid for education.”
(Adds comment from David Bergeron.)
--With assistance from Sahil Kapur and Janet Lorin.
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