Why Elizabeth Warren’s Student Debt Payment Plan Isn’t so Radical
You’ve probably heard of Elizabeth Warren ‘s proposed plan to write off existing student debt, give new students the chance to get free college education, and fund it all with a “super-millionaire tax” (2% annual tax for families with over $ 50 million in wealth ).
You may have also seen Philip Klein’s viral editorial in the Washington Examiner, where he argues that “Elizabeth Warren’s student loan debt cancellation plan will be a slap in the face for all those struggling to pay off their loans.”
Well. It turns out that many of us would be more than happy if someone’s student loans were forgiven, even if we struggled to pay off our own. On Twitter, responses to Klein ‘s highly acclaimed tweet include, “The food regulation plans will slap the face for all who died of Salmonella,” and “The point is to make things better, so that more people don’t suffer anymore. That’s good, my kind dude.
Klein’s editorial also argues that “those who have been more responsible will rightly resent the idea that those who may have been more wasteful will now get help from the government,” which is equally false.
Not the part where people might get angry – I mean some of them can – but the part where debt-laden graduates and incoming students are just now getting help from the government.
Because, as Joel Mathis of The Week reminds us , the government has funded college education for a long time.
In fact, part of our current student debt crisis stems from the government decreasing the amount of money it previously contributed to colleges and universities:
Today’s rise in student debt is largely the result of political choices. The short version of the story is that student debt is rising because college fees are rising – and tuition is rising, in large part as state legislatures across the country are phasing out their funding commitments to public colleges and universities. …
The Great Recession is one of the villains of this story; this prompted legislatures to cut their higher education funding commitments, and for the most part, these cuts have never been reversed. According to one analysis , public funding for public colleges and universities in 2018 was $ 7 billion below 2008 levels – and that’s after adjusting for inflation. One of the ways that public four-year schools have continued to operate is by increasing tuition fees by an average of 36 percent over that decade. It is no coincidence that student debt in the United States quadrupled , from $ 345 billion to nearly $ 1.4 trillion between 2004 and 2017.
Today’s young students are no less responsible than their predecessors. They just get much less help.
Elizabeth Warren isn’t the only presidential candidate working on a plan to lower college tuition costs and write off student loans. MarketWatch has a list that lays out the political platform of each Democratic presidential candidate for higher education, and each candidate is currently campaigning for college accessibility – plus, many have made statements suggesting they want to write off as much student debt.
So if you feel like you got a little preemptive slapped in the face at the thought that the government could help other people spend less on college, remember that the government has provided more assistance in the past. This new push to make college more accessible is more like a shift back to where we were before, just like Alexandria Ocasio-Cortez’s proposed tax plan – one that restructures marginal income tax rates so that the richest Americans paid up to 70 percent – this is actually an attempt to bring us back to the tax categories of the 1950s and 1960s.
These proposed economic changes may not make you feel better about the taxes you paid this year or all the money you put into your student loans, but (as economists may remind us) these are sunk costs. It’s time to think about the future.