Senator and presidential contender Elizabeth Warren announced her Higher Education plan in April 2019. This week, Warren expanded on her plan to cancel student loan debt by stating that she will start the process as soon as she is in office. The Higher Education Act gives the Department of Education the ability to modify, compromise, waive, or release student loans. If elected, Warren plans to direct the Secretary of Education to use this authority on day one of her administration.
According to her website, Warren’s student loan cancellation plan will:
- Cancel $50,000 in student loan debt for every person with household income under $100,000.
- Provide substantial debt cancellation for every person with household income between $100,000 and $250,000. The $50,000 cancellation amount phases out by $1 for every $3 in income above $100,000. For example, 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.
For most Americans, the process will happen automatically, using data already available to the federal government about income and outstanding student loan debt. Warren claims that this proposal will provide partial debt cancellation for 95% of people with student loan debt, about 42 million people, and completely cancel debt for more than 75% of student loan borrowers. She also includes that private student loan debt is eligible for cancellation, stating that the federal government will work with borrowers and the holders of this debt to provide relief. According to Warren’s full higher education plan, the proposal will be funded by her Ultra-Millionaire Tax – a 2% annual tax on the 75,000 families with $50 million or more.
In a letter addressed to Warren, a group of attorneys from the Legal Services Center of Harvard Law School believe that Warren’s plan is a “lawful and permissible exercise of the Secretary’s authority under existing law.” In this letter, the group states that congress has a provision that allows a Secretary of Education to have “a more specific and unrestricted authority to create and to cancel or modify debt owed under federal student loan programs.”
While some experts support Warren’s interpretation of the Higher Education Act, others do not interpret the Department of Education’s authority as Warren does. Critics believe that the authority of the Secretary of Education does not extend to all student loans and that the authority is limited to special circumstances, like death, disability, or closed schools, or situations of severe financial distress. It is typically brought up in the context of students who were defrauded by their schools.
In addition to cancelling student loan debt, Warren says she will “take steps to improve college affordability and curb the growth of student loan debt in the future.” Among other items, her higher education plan also proposes universal free college by eliminating the costs of tuition and fees at public colleges, funded by the federal and state government, and increasing the federal investment in the Pell Grant program by an additional $100 billion over the next ten years.
Warren wrote that the new plan does not mean she will avoid Congress on student debt entirely. She will work with Congress to enact the rest of her college affordability plan as well as the wealth tax that she has said would offset its cost.
Sources:
Warren: Affordable Higher Education for All
Warren: My Plan to Cancel Student Loan Debt on Day One of My Presidency
Letter to Warren from Legal Services Center of Harvard Law School
Forbes: Senator Warren Announces A New Plan To Cancel Student Debt
CNBC: Elizabeth Warren says her plan to eliminate student loan debt can bypass Congress
Slate: Elizabeth Warren Says She’ll Cancel Student Loan Debt With or Without Congress’ Permission