Campaign Action
2020 presidential hopeful and Democratic Sen. Elizabeth Warren is introducing a bill called the Student Loan Debt Relief Act that would cancel student debt for millions of Americans. The act is similar to the student debt cancellation proposal she made in April. Now she’s working with South Carolina Rep. James Clyburn, who will sponsor the bill in the House.
First things first: Who would benefit from the bill? In a sense, absolutely everybody would benefit, because student debt is catastrophic for our overall economy. But on the individual level, this is what her bill will accomplish: If your household earns less than $100,000 per year, Warren’s bill would forgive up to $50,000 in student loans. If your household earns more than $100,00, the bill offers relief based on a ratio. Basically, the more you earn, the less relief you’re eligible for. If you make more than $250,000, you’re no longer eligible for relief.
Warren’s campaign estimates that 95% of Americans with student debt would see immediate relief from her plan.
Some nitty-gritty details: Warren’s bill includes a note that the canceled debt would not be taxed as income. Also: If you have private loans, you’d be able to convert them to federal loans, allowing them to be forgiven under her plan. The bill also includes a provision that would allow borrowers to discharge their student debt in bankruptcy, which is (almost always) unheard of today. Now that is seriously awesome.
As estimated by the campaign, the debt cancellation would cost $640 billion. This would be paid for with revenue from Warren’s proposed wealth tax, which breaks down to basically a 2% tax on wealth above $50 million, and a 3% tax on wealth above $1 billion. Relatedly, the wealth tax would also cover her plan to offer free tuition at public colleges.
“My very first bill when I got to the Senate was legislation to tackle the growing student debt crisis because I was sick of Washington allowing the wealthy to pay less, while burying tens of millions of Americans in mountains of student loan debt,” Warren states in a press release about the bill. “Since then, Washington has only allowed this crisis to get worse—especially for people of color. Enough is enough.”
Curious about what race has to do with it? A lot! In short: Because there’s a consistent gap in wealth between white people and people of color, black borrowers tend not only to take on more debt in order to attend college, but also later have a harder time repaying it. See: the cycle of poverty. Sen. Bernie Sanders has also released an exciting student debt relief plan that would cancel all outstanding student debt, and has also noted how important it is in terms of racial wealth equality.
Want to hear more from Sen. Warren? Check out our new interview with her as part of our video series Making Progress, where she talks more about her vision of the United States with President Warren at the helm. You can also check out our breakdown of her student debt relief calculator here.