On Tuesday, Sen. Elizabeth Warren released her plan to use existing laws to begin the process of cancelling student loan debt for 95% of borrowers on the first day of her presidency. Warren first proposed this plan in April 2019, but Tuesday’s release revealed that she would begin this debt cancellation on day one.
According to a report from LendEDU, NC State’s class of 2018 averaged $24,053 in debt per borrower, and according to a report by the Center for Responsible Lending, approximately 1.2 million North Carolinians hold a total of $44 billion of student debt.
Under Warren’s proposal, she pledges to direct the secretary of education to use their authority and take steps toward modifying federal student loan policy to be consistent with her plan to cancel up to $50,000 in debt for almost 42 million people.
According to Tuesday’s release, Warren also pledges to have the secretary of education “rein in the for-profit college industry, crack down on predatory student lending, and combat the racial disparities in our higher education system.”
The Higher Education Act, according to the American Council on Education, gives the U.S. Department of Education the ability to administer most federal student financial aid. The Higher Education Act also gives the Department of Education the power to administer many of the federal education policies created by Congress, such as releasing student loans, which gives them the authority to wipe away debt that may not meet the eligibility criteria for certain cancellation programs.
Different types of loan cancellation programs, according to Federal Student Aid, include public service loan forgiveness, teacher loan forgiveness, and in rare cases, discharge in bankruptcy.
Additionally, Warren proposes simplifying the application process for these existing cancellation programs, which would allow additional relief for as many as 1.75 million borrowers. Warren also said that she would ensure these loan cancellations wouldn’t result in any additional taxes for borrowers.
To offset the costs of this plan, Warren is proposing a wealth tax on households with a net worth of $50 million or more.