Within the past 20 years, tuition at public four year universities has risen over 100% (adjusted for inflation), according to research from the College Board. With costs on the rise, issues of affordability have entered the public spotlight and reducing一or eliminating–expense of higher education has become a central component of the Democratic platform.
Last week, presidential candidate Elizabeth Warren released a comprehensive plan for cutting college costs. “I’m calling for something truly transformational,” she announced in an article on Medium. “Universal free public college and cancellation of student debt.”
If enacted, Warren’s plan would:
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Cancel $50,000 in student loan debt for every person with a household income under $100,000. The $50,000 cancellation would phase out by $1 for every $3 of income above $100,00 (for example, a person earning $130,000 per year would get $40,000 in student loan debt canceled). No cancellation would occur for those earning $250,000 or more per year.
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Make two- and four-year public universities free of tuition and fees.
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Invest an additional $1 billion in Pell Grants over the next ten years to assist students with non-tuition fees.
The proposal would cancel student loan debt for over 95% of the 45 million Americans affected, wiping out loans completely for 1/4 of them. In most cases, cancellation would take place automatically based on income and loan data the federal government already possesses.
Warren referenced an economic analysis that placed the cost of debt cancellation at $640 billion. On top of her Universal Free College Program, spending would total about $1.25 trillion over ten years.
“The entire cost,” she explained, “is more than covered by my Ultra-Millionaire Tax一a 2% annual tax on the 75,000 families with $50 million or more on wealth.”
An INSIDER poll found that the proposal appeals to many constituents: 57% of Americans who have paid off their student debt and 82% of those with current student loans support debt cancellation. Among those who never took out student loans, over half (54%) are still in favor of cancelling student debt. Overall, 77% of Democrats who plan to vote are somewhat or strongly in support of the plan.
Proponents argue that relieving college costs would strengthen the economy as well as benefiting debt-burdened individuals. Academics at Brandeis University who studied the proposal for Warren concluded that it would generate “consumer-driven economic stimulus, improved credit scores, greater home-buying rates and housing stability, higher college completion rates, and greater business formation.”
However, disputes about cost and fairness have fed controversy over the proposal. The Urban Institute projected an expense of $955 billion for debt cancellation ($315 billion more than Warren’s team estimates) and not everyone believes that this is a fair use of public money. “A lot of people have sacrificed for years to pay back the money they borrowed,” wrote the Editorial Board of the Chicago Tribune. “They’d be justified in asking: If I had to pay it back, why don’t others?”
Other critics claim that the plan isn’t progressive enough and would disproportionately benefit the wealthy. Washington Post columnist Catherine Rampell noted that “This would be a big giveaway to high-income families who plan to send their kids to college anyways and don’t need to be comped. Free colleges means it’s free for Bill Gates’ kids, too, after all.”
The average federal student loan debt is $32,000 and increases among high income groups who tend to have undergone more schooling. According to Sandy Baum, a Senior Fellow at the Urban Institute, canceling just $10,000 in student debt would leave a third of borrowers一“virtually all the borrowers who are low-income”一debt free.
Brookings Institution Senior Fellow Adam Looney called the plan regressive because it would mean that “the top 20 percent of households receive about 27 percent of all annual savings, and the top 40 percent about 66 percent. The bottom 20 percent of borrowers by income get only 4 percent of the savings.”
Whether or not Warren’s plan becomes a reality, the issue of college affordability has taken a prominent position in the Democratic platform. Presidential candidates Bernie Sanders and Julian Castro have also expressed support for free college, and candidates Kamala Harris, Cory Booker, and Kirsten Gillibrand have signed on to legislation that calls for debt-free higher education.