Warren Proposes Student Loan Forgiveness and Free College

It's an interesting idea, although one fraught with moral hazard.

Image captured from Warren 2020 website

Elizabeth Warren is working hard to make herself the most progressive candidate in the Democratic field, outdoing even Bernie Sanders.

CNN:

Sen. Elizabeth Warren on Monday proposed eliminating the student loan debts of tens of millions of Americans and making all public colleges tuition-free, staking out an ambitious stance on one of the central policy debates of the 2020 Democratic primary.

Student debt and college affordability have become a key dividing line in the Democratic race, between more progressive candidates who favor sweeping new tuition and student-loan benefits and others who support more incremental adjustments to the way Americans pay for education.

Warren’s new plan would forgive $50,000 in student loans for Americans in households earning less than $100,000 a year. According to analysis provided by her campaign, that would provide immediate relief to more than 95% of the 45 million Americans with student debt. The Massachusetts Democrat and 2020 contender is also calling for a drastic increase in federal spending on higher education that would make tuition and fees free for all students at two- and four-year public colleges and expand grants for lower-income and minority students to cover costs like housing, food, books and child care.

The campaign estimates that the plan would cost $1.25 trillion over 10 years.

The revenue from Warren’s wealth tax proposal — a 2% tax on wealth above $50 million and a 3% tax on wealth above $1 billion — would pay for her newest proposal, her campaign said. According to details shared by her campaign, the massive debt cancellation and free college plan additionally asks states to chip in to cover the cost of tuition and fees. Warren has also said her universal child care proposal would be paid for by her wealth tax.

[…]

Warren — a co-sponsor of Sen. Bernie Sanders’ 2017 legislation that would make four-year public colleges tuition-free for some students — said her new plan is “bigger” and “goes further” than Sanders’, who is also vying for the Democratic nomination.

“It covers more and it addresses both the access question of going to college and the problem of the debt burden for our students,” she said.

[…]

There is broad support among the Democratic presidential candidates for making college more affordable, though they differ on how to do so. Sens. Cory Booker, Kamala Harris, and Kirsten Gillibrand — along with Warren — are all co-sponsors of Sen. Brian Schatz’s Debt-Free College Act. It would establish a matching grant to states that commit to helping students pay for the full cost of attendance without taking out loans.

But other candidates — including Sen. Amy Klobuchar and South Bend, Indiana, Mayor Pete Buttigieg — have stopped short of embracing a free-college platform.

“I am not for free four-year college for all, no,” Klobuchar said at a CNN town hall in February, though she noted she would support making community colleges free.

Buttigieg has argued that free college would result in those who earn less because they didn’t go to college subsidizing those who did go to college and tend to enter higher-paying careers. But he has called for expanding Pell grants and incentivizing states to invest more money in higher education.

CNN, “Elizabeth Warren releases sweeping student debt cancellation and free college plan”

Buttigieg isn’t the only one raising fairness issues. Philip Klein, the executive editor of the Washington Examiner, claims that the program would amount to “a slap in the face to all those who struggled to pay off their loans.”

The plan would be tremendously unfair to those who have been struggling for years to pay off their student loans.

It’s true, some people may simply earn too little to make a dent in student loans no matter how hard they work and no matter how much they reduce their expenses. But that doesn’t tell the whole story.

There are those who may have taken higher-paying jobs they didn’t necessarily want to pay off loans. And there are those who have cut expenses to the bare bones to pay off loans while watching their friends with similar salaries eat out and travel and de-prioritize paying off loans. Those who were more responsible will feel justifiably enraged at the idea that those who may have been more profligate will now get a bailout from the government.

This is the worst sort of pander from an increasingly desperate politician.

Klein’s tweet promoting the column

got “ratioed”—the phenomenon where replies vastly outnumber likes and retweets, indicating scathing disapproval. At this writing, there have been nearly 6000 replies compared to 906 likes and 203 retweets.

Klein updates his post in response:

[M]ost of the responses boil down to mocking my piece with sarcastic arguments structured as: “People have been enduring X and it’s bad, so we should oppose any policies that would prevent X in the future.” An example is: Saying student loan forgiveness would be unfair to those who struggled to pay off their loans would be like saying, we can’t cure cancer, because it would be unfair to those who already died from the disease.

Unlike those other examples, simply saying the government will cancel everybody’s loans does not solve the underlying issues associated with the rising cost of attending college in the same way that a theoretical cancer cure would actually eliminate the disease. This is only true if you believe government declaring something free is the equivalent of it having no cost.

Curing cancer would not have negative impacts on those who already suffered from cancer, whereas if the government were to take on the cost of student loans, it would be a burden that would be placed on other citizens either in the form of higher taxes or more debt. While Warren insists that her plan would be paid for by taxing ultra-millionaires, she has already promised that ultra-millionaires would be paying for a wide range of her policy proposals. In reality, should she be elected her agenda would not be able to be financed without higher taxes on the middle-class, as is the case in other nations with the type of social welfare state she envisions. Money is fungible, too, and a tax on ultra-millionaires being used to pay for student loan cancellation is revenue that is then not available to pay for other government priorities.

Those who made decisions such as going to a less expensive school that may not have been their top choice, taking a sub-optimal job, or living more frugally, will not receive the same benefits from government as those who went to the more expensive school, took the job they wanted, or lived in a more profligate manner.

Furthermore, there is no moral hazard issue involved with curing cancer. That is, paying off student loans would be another signal from the federal government that those who may be engaging in less responsible behavior will eventually be bailed out by government while those who make responsible decisions will receive no benefit. As we contemplate what to do about the long-term entitlement crisis, this sends a horrible signal — that there’s no reason to be a sucker and manage money wisely now, because at the end of the day, the government will always be there to step in.

While I don’t think the mocking tone in Klein’s original piece did his argument any favors, his premise is solid. It’s manifestly unfair to forgive the loans of people who haven’t paid them back while doing nothing to compensate those who have. Indeed, I see no rationale other than cost to treat like people differently in relief programs.

That said, while I have no doubt that this initiative is partly grounded in a desire to differentiate herself from a field that’s getting more crowded by the day, her motivation here strikes me as heartfelt. From her Medium post* linked from her campaign site:

I thought my dream of teaching was over. But then a friend told me about the University of Houston, a public four-year college about 40 minutes away. We were a young couple, watching every nickel. I figured I couldn’t afford it.

But it turned out that tuition was just $50 a semester. This was a quality, public education — and I could afford it on a part-time waitressing salary. This time, I had the good sense to grab my chance at college with both hands. I got my degree and I got to live my dream: I became a teacher for students with special needs.

Higher education opened a million doors for me. It’s how the daughter of a janitor in a small town in Oklahoma got to become a teacher, a law school professor, a U.S. Senator, and eventually, a candidate for President of the United States.

Today, it's virtually impossible for a young person to find that kind of opportunity. As states have invested less per-student at community colleges and public four-year colleges, the schools themselves have raised tuition and fees to make up the gap. And rather than stepping in to hold states accountable, or to pick up more of the tab and keep costs reasonable, the federal government went with a third option: pushing families that can't afford to pay the outrageous costs of higher education towards taking out loans.

The result is a huge student loan debt burden that’s crushing millions of families and acting as an anchor on our economy. It’s reducing home ownership rates. It’s leading fewer people to start businesses. It’s forcing students to drop out of school before getting a degree. It’s a problem for all of us.

We got into this crisis because state governments and the federal government decided that instead of treating higher education like our public school system — free and accessible to all Americans — they’d rather cut taxes for billionaires and giant corporations and offload the cost of higher education onto students and their families. The student debt crisis is the direct result of this failed experiment.

It’s time to end that experiment, to clean up the mess it’s caused, and to do better — better for people who want to go (or go back) to college, better for current students, better for graduates, better for their families, and better for our entire economy.

I’m skeptical that Warren’s personal example is widely generalizable. She’s an extraordinarily intelligent and hard-working individual who actually had an academic scholarship coming out of high school. Because she’s a woman and of a generation where women dropped out of college upon marriage, she did just that and delayed her education. But she was uniquely suited to rebounding and doing so spectacularly.

Her larger point, though, is one that most people over a certain age—perhaps even including Klein—don’t get: the cost of tuition has skyrocketed in recent years.

I managed to get three degrees from state universities (with a stint in the Army in between the second and third) without incurring debt. But my tuition for my undergrad degree was a mere $400 a semester ($895 in today’s dollars) and $525 ($1,128) for the master’s. It’s now $324 per credit hour—$5832 for an 18-hour load; $6804 for the 21-hour load I typically carried to speed my way through. That’s almost an eightfold increase in real dollars. And that’s not even looking at fees, books, housing, and other expenses. It’s a game-changer.

Warren is right to want to do something about it. Whether her plan to do this by increasing taxes on the highest earners is the right way to finance it is another question.

And so are the moral hazard questions.

I think Buttigieg’s concern that blue collar workers who didn’t go to college will wind up financing those who do go is likely to have more traction than Klein’s concern over those who went to college and paid their loans on time. But both are valid.

Those are solvable issues. Maybe we should tie loan forgiveness to public service, giving those who go into teaching or other occupations relief. Or maybe we should give people who took out loans from for-profit schools and had a rough time turning their degrees into well-paying jobs special consideration. In both cases, we could treat people who’ve met their payment obligations on an equal basis with those who haven’t.

Perhaps more importantly, it’s worth questioning Warren’s central premise that we ought encourage everyone to go to college—let alone a four-year bachelor’s program. Again, very few people are Elizabeth Warren.

__________
*I find it amusing when public officials use third-party sites rather than self-hosting these messages. This is especially ironic in the case of Medium, which limits readers to four “free” articles a month before demanding access to their Facebook and Google accounts for data mining—a practice Warren and others rightly decry.

FILED UNDER: *FEATURED, Education, Elizabeth Warren
James Joyner
About James Joyner
James Joyner is a Security Studies professor at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. The other issue that Warren’s plan as I understand it presents is how exactly she would pay for all of this.

    Apparently, she’s proposing a tax on the assets of the ultra-wealthy according to the reports I’ve read. This mirrors other Democrats who have proposed a “wealth tax” to pay for everything from the Green New Deal to Medicare-For-All. Leaving aside the issue of how such a plan could make it through Congress, this proposal appears to present Constitutional problems.

    As the linked article explains, the Constitution only authorizes Congress to impose certain types of taxes. One type of tax, of course, is the income tax, which is authorized by the 16th Amendment. Beyond the 16th Amendment, though, the Constitutional only authorizes Congress to impose taxes in a manner proportionate to the population of each state. A “wealth tax” would clearly not do this and, if it somehow became law I have no doubt it would be the subect of immediate legal challenges. The outcome of such chalenges is far from clear but there is a good argument that the type of tax on wealth that Warren is proposing would not pass Constitutional muster.

  2. Hal_10000 says:

    @Doug Mataconis:

    Isn’t this about the third or fourth thing she’s going to pay for by taxing the wealthy? Until Warren admits that her plans are going to necessitate big middle class tax increases, my days of taking her as a faux wonk are only coming to a middle.

    I think it’s interesting, though. We just had a thread the other day about how healthcare providers are going to have to take “haircuts” under a universal healthcare system. But when it comes to higher ed, that never gets mentioned. We’re only supposed to throw more and more money at it (indeed, there’s a fair amount of research indicating increasing federal funds are driving tuition hikes). Academia has become bloated with administrative costs. And yet we don’t talk about that. We’re never supposed to do anything about that. No, just more and more money ad infinitum.

    The countries that offer “free” education send way fewer people to college and exercise way more control over costs. We understand that trade-off when it comes to healthcare, but not with higher ed.

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  3. Andy says:

    The other problem is that college is really a luxury good. The only 1/3 of the US adult working population (24-65) has completed a 4 year college degree. And we’re near the top of all countries in the world for that statistic.

    If you look at the completion of any tertiary education (adding 2-year degrees and formal vocational training), that only jumps us up to about 45% of US adults. Canada tops this list with 56%.

    So what about everyone else? Higher education is already highly subsidized, and those with natural talent and intelligence for it are even more subsidized thanks to scholarships, grants and access to better schools. What about all the Americans who aren’t college material – are they just screwed?

    So I have a hard time supporting the idea of government-funded “free” college for US citizens (and maybe even non-citizens?) when the actual benefits will fall on a relative few, most of whom are likely already advantaged over the majority of our population.

    If we are really going to throw more government money at higher education, then at least throw it at fields where we have skilled worker shortages.

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  4. @Hal_10000:

    Warren seems to be adopting Bernie Sanders 2016 idea of proposing programs that sound great but which she has no idea how they would be paid for without increasing taxes on the middle-class as you said and, most likely, vastly increasing the Federal Budget Deficit and National Debt.

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  5. Hal_10000 says:

    I don’t agree with everything Williamson says here but I think he makes very good points, particularly this one;

    The current system is exploitative: The students essentially function as a conveyor belt carrying government money into the universities, leaving borrowers instead of taxpayers on the hook because it looks better from an accounting point of view: If we just gave the universities money, that would show up on the books as an expenditure; lending it to students allows us to pretend that we have created an asset when all we have actually created is a great deal of debt and horses**t.

    This turned my thinking around on it, in that we are basically taxing college students to pay for college. This is not a bad idea in principle, but we could do without the rigmarole. If we are going to keep the loan system, my preferred solution is make student debts dischargeable in bankruptcy, limit payments to a percent of income, make colleges have to eat anything above that.

    The higher ed bubble is going to pop sooner or later. All Warren’s proposal would do is inflate the bubble further.

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  6. Jen says:

    I really, really wish the cost discussion was taking center stage. The increase has been insane, and the only way to get it under control is by lowering demand. I think that free community college is the best path. It would do several things at once–those interested in learning a trade could do so without incurring debt; those who want a four-year degree would look to community colleges first to earn transferable credits, which would alleviate costs for families for at least the first two years and lower demand at four-year schools which (one hopes) would cause them to figure out a way to reduce prices from a competitive perspective.

    Warren needs to figure out her math, and what her priorities are, because most people understand that “free” means someone pays, and she can’t have “billionaires” paying for all of her proposals.

  7. Kathy says:

    One thing I think is deficient in almost every country in primary education, is the basics of personal finance. IMO, if people learned about it they’d be better able to manage money, debt, investment, and would be better able to judge the potential value of a college degree vs the debt incurred.

  8. Gromitt Gunn says:

    I had to declare personal bankruptcy in 2011 after getting caught up in the recession in 2010. Everything was forgiven except for student loan debt, which is exempt under the law.

    If I had been able to continue in my private sector career uninterrupted, I would have had my loans paid off years ago. But I got a public sector job in late 2010 and then switched to community college teaching in 2013. The work suits me, but I have had to do Income Sensitive Repayment due to the differential in income between private and public sector.

    I started making payments under the Public Service Loan Forgiveness plan in September 2011, and I *should* be able to make my application for tax-free forgiveness once I make my 120th qualifying payment in August 2021, but I keep getting jerked around by the servicing company that administers the plan on behalf of the government. I spent the past year fighting to get credit for *four years* of payments that I made on time under a different servicing company. I finally was able to get credit for 3 1/2 years, but it looks like I am going to end up eating six months of additional payments.

    Still, 2022 is much much better than 2025. Assuming that it doesn’t take a year for the application to be approved once it is finally submitted. Or that the Trump administration doesn’t dismantle the program entirely.

    I find the moral hazard argument disingenuous at best.

    I did all of my analysis on cost of attendance at the local regional state university, employment projections and median salaries through the Occupational Outlook Handbook at BLS, etc., to determine my project ROI before I started work on my MS program. My GMAT scores were above the 95% percentile. I understand ROI and NPV. I should be the last person to get caught up in a never-ending cycle of loans that will have me paying off a master’s degree until I’m in my 50s, yet fate intervened and here we are.

    It has affected every major financial decision I’ve had to make for the past 15 years. I can’t afford to help my elderly mother live in decent senior living, so she lives in my guest room, and I cross my fingers every day that she doesn’t end up in a wheelchair because the layout of the house would prevent her from being able to access a bathroom while we scramble to get her into what little income-subsidized senior living exists in the area.

    Am I seriously supposed to feel bad that, if my loans are finally forgiven, it might hurt the feelings of someone who, through different turns of fate, didn’t have similar setbacks? Yeah…no.

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  9. Jen says:

    @Kathy: I agree. I had a segment in middle school (I think it was in “Social Studies” class) that went over what I would consider basics-plus. We learned how to balance a checkbook, how interest rates work, learned what life insurance was (and the difference between term and whole-life), budgeting, and were assigned to track stocks over the course of several weeks. There might have been more, but those are the things I specifically remember learning about.

    I was astonished to find out that this was a very uncommon thing to have learned in school. Other than my friends who attended the same school system, I can’t think of any of my friends who had such a comprehensive personal finance segment–not just that early on, but EVER. It boggles my mind that we assume parents will somehow pass this information along, or that students are just expected to pick it up (from where??).

    The student loan situation is just not sustainable. I have several millennial friends who will be paying off college loans into their 50s.

  10. de stijl says:

    America: This problem is unsolvable! And any potential plan would cost too much!
    Every other industrialized nation: lol! what?!

    (See, also, healthcare or gun control.)

  11. James Joyner says:

    @Jen:

    those who want a four-year degree would look to community colleges first to earn transferable credits, which would alleviate costs for families for at least the first two years and lower demand at four-year schools

    I think this is increasingly going to happen. My home state of Virginia offers absurdly cheap community college with a guarantee of admission to the Virginia public university (including fantastic schools like UVA, William and Mary, and Tech) of choice if those years are completed with decent grades.

    The downside is largely social: the formative experience of going away to college, forming networks, and the like would be considerably diminished.

  12. David S. says:

    @Jen: I didn’t have such a segment, but I did occasionally have teachers who seemed to feel obligated to throw that kind of thing in. There were a few days in math class in high school where we tracked stocks and learned about interest rates, but I don’t think it actually landed with anyone, least of all with me.

    Everything I know about personal finance came from my parents’ occasional lessons and sheer osmosis. I appreciate the efforts of those teachers now, but my childhood self was baffled at the relevance. I think that that’s the kind of thing they once would have taught in “Home Economics”? Not a class I ever took, so I don’t know.

  13. James Joyner says:

    @Gromitt Gunn:

    Am I seriously supposed to feel bad that, if my loans are finally forgiven, it might hurt the feelings of someone who, through different turns of fate, didn’t have similar setbacks? Yeah…no.

    I think that’s perfectly fair. But Warren’s plan isn’t targeted at people who suffered financial catastrophe and need help to recover. She’d simply wipe away $50,000 for those who still owe that much and give nothing to those who paid their debts. That’s problematic.

    I’d be much harder-pressed to argue why we shouldn’t change the policy whereby student loan debts were the one type of debt not forgiveable in bankruptcy. But, again, that’s not what Warren is proposing.

  14. DrDaveT says:

    Taking a tangent from the main issues, I think it is interesting to speculate what would happen to grades and graduation rates if most enrolled students were no longer a profit stream for colleges and universities…

  15. Jim Satterfield says:

    People like Klein and far too many “conservatives” never think of the impact of issues like this on the greater economy.

    https://www.forbes.com/sites/investor/2018/11/08/how-student-debt-is-destroying-the-economy-and-how-we-can-stop-it-in-its-tracks/#27de4bc36619

  16. Kathy says:

    @Jen:

    I was astonished to find out that this was a very uncommon thing to have learned in school.

    I never learned anything like that in school.

    I know the feeling, though. When the flat Earth craze (psychosis? pathology?) first got started, or noticed, I asked in a message board whether people weren’t taught any more the proofs that show the Earth to be round. Several people, some of them around my age, had no clue about any such proofs.

    Basic science also should be taught in school. I assume it still is, but given the embrace I see of all kinds of pseudo-science, especially as regards medicine, I wonder what people get taught. No doubt lists of information they memorize, regurgitate, and forget as soon as the test is over.

  17. wr says:

    Fascinating that it’s always such a huge moral hazard when we as a society spend money to help the poor and middle class, but never when it comes to writing huge checks in the form of tax cuts to billionaires and corporations. Why, it’s almost as if the notion of “moral hazard” exists the little folk from demanding they be treated as well as their superiors.

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  18. Tyrell says:

    Does her plan include retired people who want to go back to school? How about graduate degrees; will those be included?
    Senator Warren talked last week about free health care insurance for everyone.
    I want to see the fine print on how she plans on paying for all this.

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  19. James Joyner says:

    @wr:

    Fascinating that it’s always such a huge moral hazard when we as a society spend money to help the poor and middle class, but never when it comes to writing huge checks in the form of tax cuts to billionaires and corporations.

    The latter may or may not be good policy but it’s not “moral hazard.” Many of us, though, argued that bailing out financial firms who caused the Great Recession because they were Too Big To Fail constituted moral hazard because, well, it did. (Many of us, including myself and Dave Schuler, argued for simply bailing out the workers who would have lost their jobs through no fault of their own.)

  20. Slugger says:

    My education including medical school left me with no debt. No Debt! This is a huge advantage over starting the race of life in the hole. We need to get back to the normal course of events as things were from 1945 to around 1980. The G.I. Bill in that era not only paid tuition, but it even provided a living stipend. The acceleration in the cost of education is made possible by the truly usurious nondischargeability of student loans. Bankruptcy and loan reworking are well established parts of capitalism.

  21. Jay L Gischer says:

    I got my education in the Seventies, I got multiple degrees from major institutions at a very low price. I would find it hard to live with myself if I didn’t take every action I could to make that possible for students these days.

    It wasn’t “free”, tuition was $220/quarter. Even with inflation, that’s super cheap. It’s not clear I could have made it through at todays tuition rates, even with in-state reductions.

  22. Stormy Dragon says:

    How is this going to work going forward? Will freshmen enrolling at Havard the year after Warren’s jubilee be banned from getting a loan to pay for it? Or are they guaranteed $50,000 from the government to finance their education? Should taxpayers be subsidizing elite private colleges?

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  23. Sleeping Dog says:

    While something needs to be done about the cost and burden of college, I’m not a fan of he concept of ‘free’ college. I’d rather the country adopt Milton Friedman’s proposal that the student repay at a fix percentage of income for a certain number of years. That would benefit the student and the country.

  24. Andrew says:

    It is time for the United States to join the more mature side of the spectrum of western civilization. The fact we still argue over healthcare in the 21st century…Where for some reason subsidizing Amazon, Walmart, Google, Banks, Farmers, and so on is good business and the role of gubmit!! …yet a diabetic should have to ration or go without insulin because he/she can’t afford medicine and rent and food?

    I am not a fan of Warren. I just agree in the direction she is trying to take the conversation.
    After all when someone proclaims “The U.S. has the best healthcare in the world!!”

    That’s an incomplete sentence.

    The U.S. has the best healthcare in the world that money can buy.

    And that is pathetic.
    As is our higher education system, and vouchers.

  25. Andrew says:

    As far as student loan forgiveness, we bailed out the banks. If the student loan debt crisis becomes that large of a problem. Stalls the economy, or causes a lost generation. Or another lost generation, for that matter.
    Then the best days of this nation are behind us. All because bettering yourself in a capitalist system ends up being a rare commodity and not a necessity. Which is counterproductive in a system that requires innovation and the next best thing.

  26. Blue Galangal says:

    @Andrew: When Sputnik was launched, the space race was on and we paid students to go to college to study engineering. Ten years later the US landed men on the moon.

    In my neck of the woods – and in many others – tech demand is far outstripping supply. Why aren’t we paying students to study computer technology, cybersecurity, etc.? Certainly we’re not going to be able to depend on Chinese or Indian students for much longer (the question as to whether we should I will leave to international security experts) since international student applications and matriculations have already plummeted. How shortsighted as a country can we be? (That was a rhetorical question; clearly the answer is, “Trump.”)

    As for how to pay for it: let’s go back to those 1950s-era tax rates. I mean, the GOP seems to want to restore the 1950s in every other way.

    I feel one thing Warren recognizes is that, historically speaking, programs consisting of large government investment (e.g., WWII & its concomitant postwar spending) are an efficient way to raise large parts of the population into the middle class, and forgiving $50k of college debt is certainly along those lines. Warren also understands that most Americans don’t have $400 in savings. Studies have been done on the effectiveness of providing lump sums for savings accounts in terms of stabilizing families and so far that seems to be an effective approach. Forgiving $50k of student loan debt would contribute greatly to financial stability for a lot of people, especially younger people who’ve gotten the short end of the stick for a long time now since the me-me-me of the Baby Boomers has drowned out almost every other age demographic. The millennials literally are our future. Why are we hobbling them with this kind of debt when our parents were able to buy a house for $10k on one income?

  27. Slugger says:

    Since the Trump tax cuts of January 2017, the annual budget deficits have increased by $200-250 billion the last two years with most of those tax cuts going to the peak earners. Cutting the indebtedness of young people by $50 thou might make a big difference in their purchasing power. They might buy houses, cars, and furniture. Their purchases might have a big impact. Yes, I’m proposing trickle-up economics. It would be an interesting experiment.

  28. Stormy Dragon says:

    @Andrew:

    As far as student loan forgiveness, we bailed out the banks.

    Who do you think is going to get that $1.25 trillion under Warren’s proposal?

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  29. Gustopher says:

    @James Joyner:

    I’d be much harder-pressed to argue why we shouldn’t change the policy whereby student loan debts were the one type of debt not forgiveable in bankruptcy. But, again, that’s not what Warren is proposing.

    The education that the bankrupt former student got cannot be repossessed, or sold off to pay off the debts.

    If you only look at assets and value, rather than people, it’s a pretty straightforward argument, which I have heard countless times, although I wonder why they don’t apply the same argument to medical debts.

    I do think that at the very least we should allow student loan debt to be restructured and partly forgiven after bankruptcy — X% of gross income for Y years, max and then done (play with X and Y to wipe out 2/3rds of the debt on average). Screw over people like @Gromitt Gunn less.

    I’d prefer to discharge it completely, but I shudder to think about the consequences of that — would lenders get intimately involved in student’s college careers, requiring certain grades and majors? Honestly, I’m fine with propping up the current system and putting a modest safety net under it, and let it creak along for the time being.

    Health care is more important. That’s 1/7th of the economy, and affects 100% of the people in this country.

    The next president is likely only going to get one or two big things done, if any. I don’t worry about how we are going to pay for five different big programs from a pile of money big enough to maybe pay for one, since were only going to get one.

    I want to know which things Warren prioritizes and which are just “that would be nice”. Depending on the Senate and the political situation in 2021, she might have to give up on her first priority, and just do a “that would be nice”, but I want to know where her heart lies.

    If she really wants to do them all, she risks doing a domestic version of the George W. Bush “let’s fight two wars at once” mistake, and fail at everything.

    I have this same issue with basically all the candidates that I have any idea of what they want to do. It’s early, and they are throwing things at the wall to see what sticks.

    I’m a small-c conservative with liberal ideals. It’s why I find Pete Buttigieg appealing. Medicare buy in, with a goal of Medicare for all, rather than a two year transformation of the economy by going straight to Medicare For All.

    What do we want? Carefully measured incremental change in a decidedly progressive direction on a host of issues!
    When do we want it? Now!

  30. Andrew says:

    @Blue Galangal: The question was rhetorical, but because The Baby Boomers are the reason Americans have the stereotype of being stupid, fat, and lazy. But, Millennials not wanting to have to work four jobs between two people, and also parent…well, that’s just lazy people looking for a handout!

    @Stormy Dragon:
    We bailed out the banks before*

    Better?

  31. Tyrell says:

    @Jen: From talking to people it seems the middle class students get hit with the full cost. No family that I talked to had received any scholarship money. And some of their children were in the top five percent of their class with advanced courses. One parent spent two years and had applied for over one hundred scholarships: did not get one cent. I would like to see some information on just who gets the funding, besides athletes.

  32. Nightcrawler says:

    Instead of wholesale cancellation, why not restore bankruptcy protections for student loans?

    I know what’s coming next: “But then people will declare BK the day after they graduate!” We could prevent that by imposing a waiting period, say 7 to 10 years after graduation/ceasing school. Further, if the student returns to school, the BK clock gets reset. So, if you graduate with a bachelor’s this year, then go back for a master’s in 2022, the clock will reset and won’t start running again until you graduate with your master’s/drop out.

    This is not without precedent. Other debts have waiting periods; you can’t run up all your credit cards over the weekend, declare BK on Monday, and have them wiped out.

    This would offer an out to students who truly have no chance of ever paying off their debts while at the same time not allowing them to get off scot-free. Bankruptcy has consequences. However, at least, eventually, the debtors would eventually be able to rebuild their credit and their lives.

  33. Nightcrawler says:

    —–The education that the bankrupt former student got cannot be repossessed, or sold off to pay off the debts. If you only look at assets and value, rather than people, it’s a pretty straightforward argument, which I have heard countless times, although I wonder why they don’t apply the same argument to medical debts. ——–

    Or gambling debts. Or credit card debts. If you wipe out your credit cards in BK, the things you bought with the cards are NOT repossessed. Nobody comes to your house and starts hauling away your furniture, clothing, electronics, etc.

    Additionally, quite a bit of credit card debt is spent on food and on intangibles that cannot be repossessed, such as vacations and entertainment.

    The only things that can get repossessed are real estate, vehicles, and boats.

  34. Han says:

    @James Joyner:

    The latter may or may not be good policy but it’s not “moral hazard.”

    It’s a lot more moral hazard than your example. IIRC, moral hazard is a person engaging in risky behaviors when they won’t bear the cost of those behaviors. I’m not sure what risky behaviors a student will engage in by having some of their debt wiped away, but the argument can be made that the risky behavior of voting for Trump in hopes of getting tax breaks when one is sheltered from the negative consequences of a Trump presidency is pretty morally hazardous.

  35. Michael Reynolds says:

    If Warren simultaneously proposed a system of apprenticeships and trade schools, I’d listen. But this is just more elitist bullshit. Yes, it’s very bad that so much money is owed, and I favor letting people refinance, but we need to get past this notion that college is a panacea. Add a bunch more BA’s and all you do is devalue BA’s. Pretty soon you’ll need a BA to pull shots at Starbucks.

  36. Stormy Dragon says:

    @Han:

    Average Community College education is $17.5K per year
    Average State College education is $25.3K per year
    Average Private College education is $50.9K per year

    The moral hazard is that students are encouraged to attend an overpriced private school when they could get just as good of an education for a fraction of the price at a public school.

  37. Han says:

    @Stormy Dragon: Well if that’s the case, then scholarships are moral hazards. Pell grants are moral hazards. Now if you could convince me students would be more likely to get degrees they don’t need and won’t use, or skip class and take a failing grade because they don’t care if they get an education or not, then you might have something.

  38. The abyss that is the soul of cracker says:

    The millennials literally are our future. Why are we hobbling them with this kind of debt when our parents were able to buy a house for $10k on one income?

    Because the money will always look better in “my” wallet than in “yours” and capital will always benefit the nation better when “I” hold it, too.

  39. Just nutha ignint cracker says:

    @Michael Reynolds: The President of the United States is no more capable of creating apprenticeships and trade schools [by which I assume you mean schools to teach specific distinct trades as opposed to the 2-year colleges that do something in the neighborhood of 80% of all vocational training–and were included in Warren’s proposal] than he or she is of creating jobs. But if you are in favor of vaporware promises, by all means fly at it.