More than 95% of student loan borrowers would see at least some of their debt cancelled under Democratic presidential candidate Elizabeth Warren’s new higher education proposal released on Monday.
an analysis of the plan by leading experts on student loan debt.
The Massachusetts senator outlined her proposal in a Medium post on Monday. “I’m calling for something truly transformational — the cancellation of up to $50,000 in student loan debt for 42 million Americans,” she wrote.
Under Warren’s plan, all but 5% of borrowers would walk away from at least a portion of their student debt. Meanwhile, more than 75 percent of student loan borrowers would have all of their debt erased.
Borrowers need not apply for the relief: The government would automatically cancel the debt of eligible borrowers, using already available income and loan data.
According to the researchers’ analysis, Warren’s proposal would greatly benefit borrowers with the least ability to repay their loans. (By 2023, nearly 40 percent of borrowers are expected to default on their student loans, an event that only increases their debt and devastates their credit.)
Borrowers with household incomes under $100,000 would be eligible to have $50,000 of their student debt scrubbed.
People who earn between $100,000 and $250,000 would be eligible for less forgiveness. For example, Warren writes, “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.”
And those who earn more than $250,000 would not be eligible for any debt forgiveness.
The researchers of the analysis also found that Warren’s proposal would reduce the racial wealth gap.
“Gains to net worth for households of color would be meaningful under the policy,” the authors write, adding that median wealth would rise by $6,741 for black households and $3,280 for Latino households.
The benefits would especially help those with less education.
For example, 87 percent of those with just an associate’s degree would have all of their debt cancelled, compared with 47 percent of those with a master’s degree.
“The time for half-measures is over,” Warren writes. “My broad cancellation plan is a real solution to our student debt crisis. It helps millions of families and removes a weight that’s holding back our economy.”