Senator Elizabeth Warren supports large-scale student loan relief, but argues for targeted student loan forgiveness.
Here’s what you need to know — and what it means for your student loans.
In an exchange on View last week, Warren (D-MA) argued for large-scale student loan forgiveness, but that sounded more like support for target cancellation of student loan. Here is the to exchange:
Lindsey Granger: “You fiercely advocated for the President to cancel student loan debt. But in reality, only about 13% of Americans even have federal student loan debt. So is this really the best way to reach most voters? And also, what do you say to someone like me who worked two jobs for a decade to pay off all his student loans, just finished – where do I sign up to get a refund?”
Elizabeth Warren: “So, let’s start now with who has student loans today. About 40% of people who have student loans do not have a college degree. These are people who tried, and life unfolded: pregnancies, they were already working two jobs and lost one, mom got sick, the family had to move elsewhere. And now they’re earning what a high school graduate earns and they’re trying to pay off their college debts. And it crushes their bones. Keep in mind that of those with student loan debt, more than half have negative wealth. They have no wealth…Right now there are tens of thousands of people living on social security and having their social security checks seized to pay student loans. For me, it’s a question of fairness. There was a time in America when we invested in our public colleges and universities. That’s how I got to go to a college that cost $50 a semester [and] pay it with part-time jobs. But today, this option does not exist for our young people. So it’s about saying, ‘Listen, this is difficult – we get it’. We want to invest in you. We want to invest in your education.'”
Student loan forgiveness: Warren focused on targeted student loan forgiveness
Warren has championed the large-scale cancellation of student loans. His proposal to the US Senate would cancel up to $50,000 in federal student loans for student borrowers who earn up to $125,000 a year. In his response, however, Warren presented two statistics on targeted groups of student borrowers. This leads to a larger discussion about who will be eligible for student loan forgiveness. First, Warren said 40% of student borrowers did not graduate from college. If student loan forgiveness was limited to student borrowers who had not graduated from college and earned limited income, then more Americans might support student loan forgiveness. Critics of large-scale student loan forgiveness say canceling student loans for borrowers with college degrees and earning up to $125,000 a year hurts Americans who haven’t gone to college. university and do not have access to a higher income. (Bill Maher says student loan forgiveness is a “loser” issue). Second, Warren cites Social Security recipients who have had their wages garnished to pay student loans. Again, if student loan forgiveness were granted to this targeted group of student borrowers, more Americans would be less likely to object. (Here are the potential income limits for student loan forgiveness).
Student loan relief: Warren didn’t explain how to help former student borrowers
Granger asked Warren if Granger should expect reimbursement for working two jobs for a decade to pay off student loans. Warren did not answer the question directly. This is a major problem for student borrowers who have already paid off their student loans. In many cases, these student borrowers have sacrificed financially for years, working multiple jobs, not buying a home, not saving for retirement, delaying marriage, and not having children, among other sacrifices. Former student borrowers were in the same predicament that many student borrowers face today. The only difference: today’s student borrowers may see their student loan forgiven, while former student borrowers may be unlucky. Notably, our legal system generally does not provide for retroactive relief. That said, should student borrowers who have paid off student loans more recently be compensated with an equivalent amount of “student loan forgiveness”. If not, policymakers should explain why these people will be excluded from any potential student loan forgiveness.
Student loans: next steps
Warren supports up to $50,000 in student loan forgiveness and hasn’t been shy about making student loan relief widespread. (Biden Confirms He Won’t Forgive $50,000 in Student Loans – 5 Key Takeaways). That said, his recent statements sound more like an argument for target student loan cancellation than large-scale student loan cancellation. President Joe Biden is considering a large-scale student loan forgiveness and could announce a decision shortly. That said, there is no guarantee as to how much student loan debt would be forgiven or qualify. Biden could impose several limits on who is eligible for student loan relief, including some targeted student borrowers that Warren referenced in his interview. If this happens, student loan forgiveness may not be available to as many people as expected.
As the end of temporary student loan relief approaches, it is essential that you have a game plan for your student loans. Here are some smart ways to save money on your student loans: