Professor Thomas Shapiro (HS) and Senior Research Associate at The Heller School Laura Sullivan contributed to an analysis of Massachusetts Senator and Democratic 2020 presidential candidate Elizabeth Warren’s recent plan to eliminate most student debt and make public colleges tuition-free.
Warren’s plan proposes to cancel up to $50,000 in student loan debt for households that make $100,000 or less annually, and some debt for households that make between $100,000 and $250,000 annually, according to a Business Insider article. Families that make over $250,000 annually would not be eligible for debt cancellation, said the same article.
This means that student loan debt would be completely eliminated for about 75 percent of Americans, and at least some debt would be eliminated for 95 percent of Americans, according to the analysis, as stated in the Business Insider article. Additionally, Warren’s plan aims to get rid of undergraduate tuition and student fees at public universities, both two and four-year, according to the Business Insider article.
The plan is designed especially to provide assistance to students of color, establishing a $50 billion fund for Historically Black Colleges and Universities (HBCUs) and Minority Serving Institutions (MSIs), said the Business Insider article. The plan would cost about $1.25 trillion over the span of 10 years and would be paid for by a wealth tax on American households that have more than $50 million in assets, according to the same article.
The analysis also noted that the potential debt cancellation would stimulate the economy, according to a USA Today article. “The greater ability to save and build assets entailed by a lower debt load would generate additional wealth and would be significant in the lives of debtors. It would likely entail consumer-driven economic stimulus, improved credit scores, greater home-buying rates and housing stability, higher college completion rates and greater business formation,” the analysis states.