Sen. Elizabeth Warren backs wide-scale student loan relief but makes case for targeted student loan forgiveness.
Here’s what you need to know — and what it means for your student loans.
In an exchange on The View last week, Warren (D-MA) made her case for wide-scale student loan cancellation, but it sounded more like support for targeted student loan cancellation. Here’s the exchange:
Lindsey Granger: “You’ve been fiercely advocating for the president to cancel student loan debt. But really only about 13% of Americans even have federal student loan debt. So is this really the best way to reach most voters? And also, what do you say to someone like me who worked two jobs for a decade to pay off all their student loans, just finished — where do I sign up for reimbursement?”
Elizabeth Warren: “So, let’s start now with who has student loans today. About 40% of folks who have student loans don’t have a college diploma. They’re folks who tried, and life happened: pregnancies, they were already working two jobs and lost one of them, mom got sick, family had to move somewhere else. And now they earn what a high school grad earns and they’re trying to pay off college level debt. And it’s crushing their bones. Keep in mind that of those who owe student loan debt, more than half have negative wealth. They don’t have any wealth…Right now, they’re are tens of thousands of people who are living on Social Security who are having their Social Security checks garnished to pay student loans. This is for me is a question of fairness. There was a time in America when we invested in our public colleges and universities. That’s how I could go to a college that cost $50 a semester [and] pay for it with part-time jobs. But today, that option is not out there for our young people. So this is about saying, ‘Look, it’s tough — we understand that. We want to invest in you. We want to invest in you getting an education.’”
Student loan forgiveness: Warren focused on targeted student loan cancellation
Warren has championed wide-scale student loan cancellation. Her proposal in the U.S. Senate would cancel up to $50,000 of federal student loans for student loan borrowers who earn up to $125,000 annually. In her response, however, Warren led with two statistics about targeted groups of student loan borrowers. This drives a broader discussion about who will qualify for student loan forgiveness. First, Warren said that 40% of student loan borrowers didn’t graduate college. If student loan cancellation was limited to student loan borrowers who didn’t graduate college and were earning limited income, then more Americans may be sympathetic to student loan forgiveness. Critics of wide-scale student loan forgiveness say that canceling student loans for borrowers who have a college degree and earn up to $125,000 annually hurts Americans who didn’t go to college and don’t have access to earn higher income. (Bill Maher says student loan forgiveness is a “loser” issue). Second, Warren cites Social Security recipients who are having their wages garnished to pay student loans. Again, if student loan forgiveness were granted to this targeted group of student loan borrowers, more Americans would be less likely to object. (Here are the potential income limits for student loan forgiveness).
Student loan relief: Warren didn’t address how to help past student loan borrowers
Granger asked Warren if Granger should expect reimbursement for working two jobs for a decade to pay off student loans. Warren didn’t directly answer the question. It’s a major issue for student loan borrowers who already paid off student loans. In many cases, these student loan borrowers sacrificed financially for years, working multiple jobs, not buying a home, not savving for retirement, delaying marriage and not having children, among other sacrifices. Former student loan borrowers were in the same predicament that many student loan borrowers face today. The only difference: today’s student loan borrowers may get their student loans canceled, while previous student loan borrowers may be out of luck. Notably, our legal system typically doesn’t provide retroactive relief. That said, should student loan borrowers who paid student loans more recently get compensated with an equivalent amount of “student loan cancellation.” If not, policymakers should explain why these individuals will be excluded from any potential student loan forgiveness.
Student loans: next steps
Warren supports up to $50,000 of student loan forgiveness and hasn’t wavered that student loan relief should be broad-based. (Biden confirms he won’t cancel $50,000 of student loans—5 key takeaways). That said, her recent statements sound more like a case for targeted student loan cancellation than wide-scale student loan cancellation. President Joe Biden is considering wide-scale student loan forgiveness and could announce a decision imminently. That said, there’s no guarantee how much student loan debt would be cancelled or who could qualify. Biden could impose multiple limits on who qualifies for student loan relief, including some targeted student loan borrowers that Warren referenced during her interview. If this happens, student loan cancellation may not be available to as many people as first thought.
With the end of temporary student loan relief approaching, it’s essential that you have a game plan for your student loans. Here are some smart ways to save money on your student loans:
- Student loan refinancing (lower interest rate + lower payment)
- Income-driven repayment (lower payment)
- Student loan forgiveness (cancel student loans)