In her quest for the Democratic nomination next year, Senator Elizabeth Warren has set out a remarkably silly plan for solving the alleged crisis of student debt by wiping out billions of it with a wave of Uncle Sam’s benevolent hand. This is her way of saying to her rivals, “Top this for vote buying if you can!” (No doubt several will try.)
To many Americans, Warren’s ideas will sound good, but that’s because they think about policy questions the way little kids think about candy. In today’s Martin Center article, Preston Cooper subjects Warren’s proposal to some adult thinking. He finds it as bad as a dinner of nothing but bon-bons.
Among the problems with Warren’s plan is that it redistributes wealth haphazardly. Cooper writes:
Dividing up the $640 billion based on the amount of student debt each person has leaves some poor and middle-class families with windfalls, and others with nothing. Consider three people who each earn $35,000 per year, and therefore have roughly the same position on the economic ladder. One attended an expensive private college and has $50,000 in debt, one went to community college and owes $10,000, and the third did not attend college and owes nothing. Though these people all have the same income, Warren’s plan would give $50,000 to one person, $10,000 to another, and nothing to the third.
Cooper also points out that the whole notion of a student debt crisis is nonsense. Most of those who owe money for college are not “drowning” in debt but have manageable payments that they make. Warren’s faux compassion would merely further reduce the already weakening idea among Americans that if you borrow money for something, you have an obligation to discipline yourself so you can pay off the debt.
Warren’s debt-cancellation plan makes for good bumper stickers, Cooper concludes, but utterly fails as serious policy.