The Corner

Education

Elizabeth Warren Wants to Pay Off Your Student Loans with Other People’s Money

Senator Elizabeth Warren (D, Mass.) speaks at an Organizing Event in Claremont, N.H., January 18, 2019. (Brian Snyder/Reuters)

Her latest batty idea is up on her Medium page today:

It’s time for bold action to actually fix the debt crisis. Here’s what my new plan would do:

 It cancels $50,000 in student loan debt for every person with household income under $100,000.

 It provides substantial debt cancellation for every person with household income between $100,000 and $250,000. The $50,000 cancellation amount phases out by $1 for every $3 in income above $100,000, so, 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.

 It offers no debt cancellation to people with household income above $250,000 (the top 5%).

 For most Americans, cancellation will take place automatically using data already available to the federal government about income and outstanding student loan debt.

 Private student loan debt is also eligible for cancellation, and the federal government will work with borrowers and the holders of this debt to provide relief.

 Canceled debt will not be taxed as income.

All told, more than 75 percent of borrowers would have their loans wiped out completely, and more than 95 percent would see at least some reduction in their debt.

Where to even start with this? With the fact that student loans are the result of borrowers’ own decisions — often good decisions that increased their earning power? With the fact that people who’ve been to college are generally more fortunate than those who have not? With the fact that this discriminates against people who paid off their loans early, as well as older borrowers who have been making payments for longer? With the fact it would subsidize even people making six-figure incomes? With the marriage penalty inherent in using “household income” to set the thresholds? With the fact that the student-loan crisis is dramatically overstated to begin with, with most borrowers paying less than 5 percent of their income each month?

How about better uses for the $640 billion this would cost, nearly $2,000 for every single human being in the country?

And that’s before we get to the Universal Free College program, which brings the total cost of the program to roughly $1.25 trillion over ten years.

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