Bernie Sanders and Elizabeth Warren are already vowing to do something about student loan debt. This is why the 1.6 trillion dollar issue could play a big part in the 2020 election. Just the FAQs, USA TODAY


Correction: An earlier version of this story incorrectly characterized Sen. Elizabeth Warren’s proposal. Her college plan would be funded by a 2 percent tax on households with a net worth of $50 million or more. 

Elizabeth Warren made waves with a sweeping plan to eliminate student debt and make public college almost free to attend.

The goal, the Massachusetts senator and Democratic presidential candidate said, was to provide “universal, free public college.”

But free education doesn’t exist, because educating people costs money. Professors need to be paid, buildings need to be maintained, and degrees need to be printed. Even Warren said her plan would cost $1.2 trillion over the course of 10 years. 

Warren’s proposal – along with less comprehensive free college plans from other Democrats – isn’t really about providing a free education. Rather, these plans would shift who pays for it: the individual or the government.

Warren's plan has drawn criticismfrom some liberals, who say it would benefit the wealthy over poor Americans.

What does college really cost? Here's how to find out

What we have now

Under the current system, state governments subsidize public schools, and the federal government provides money to most universities through grants and loans. Individual students cover remaining tuition and fees, offset by donor contributions.

Warren, a former law professor at Harvard, wants the federal government to partner with state governments to cover the expense of college. Much of her plan relies on using federal money from the hyper-wealthy: a 2% tax on households with a net worth of $50 million or more.  

Warren’s plan stands out for its sheer scale. The federal government would forgive up to $50,000 in student loan debt in a household making less than $100,000 annually. It would offer less forgiveness for families making up to a quarter of a million dollars and nothing for those making more than that. 

Warren says her plan would forgive the debt for millions of Americans and in the process boost economic growth. Making public college free would prevent problems with student loans, according to the plan. “For decades, we’ve allowed the wealthy to pay less while burying tens of millions of working Americans in education debt,” her statement reads.

The plan would move “resources from older Americans and people who never went to college or paid off their debt to students who still have debt,” said Robert Kelchen, who studies higher education at Seton Hall University.

Ways to forgive your debt? Not many

Warren’s plan appeals to people because it offers them a clear and immediate path to erase debts they can’t afford to pay. And right now, there are few ways to eliminate student loans short of paying them off – which can take years, maybe even decades.

For example, student loans aren’t included by default when declaring bankruptcy. That requires a separate lawsuit to prove to a bankruptcy court “undue hardship” – essentially that continuing to pay on the loans would prevent the borrower from maintaining "a minimal standard of living."

Debt elimination outside bankruptcy is possible through the Public Service Loan Forgiveness Program. It requires applicants to work a public service job, such as for a government agency or qualifying nonprofit group, and make 10 years' worth of payments. The byzantine bureaucratic requirements and confusion over the program have prevented many from using it. Only 0.6% of borrowers who've applied have had their debt forgiven.

Be one of them: Here's how to get your debt forgiven

The federal government offers programs meant to help people struggling to repay their loans. One plan allows borrowers to pay roughly 10% of their income toward loans. After 20 years, the loans would be forgiven.  Roughly a third of borrowers take advantage of these programs to keep their payments low, according to federal data analyzed by the College Board. 

These plans are complicated for consumers, said Beth Akers, a senior fellow at the Manhattan Institute, a right-leaning think tank, who studies student loans. The safety net is there, Akers said, it’s just poorly administered.

Given the supports that already exist, the goal of loan forgiveness has to be about something more than just wiping out debts, she said. “It has to be that we place some value in a social or cultural way that exceeds the costs that a plan like this is imposing on society,” Akers said.

'Government schools': What colleges think of the plan

Free public college would undoubtedly affect student enrollment at private and for-profit colleges.

Warren’s plan specifically calls for eliminating federal money to for-profit colleges. In an industry beset by a series of high-profile closures, the move would be devastating.

Colleges that close: How to keep it from happening to you

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The plan is clearly targeted at killing the industry, said Steve Gunderson, who leads Career Education Colleges and Universities, an organization of for-profit colleges.

“Most of our students are first-generation college students, often from low-income families seeking a bridge to a better future,” he said.

These colleges rely heavily on federal money, Kelchen said, because they recruit students who don’t have access to other finances. For-profits haven’t done themselves any favors. Critics point to their lower graduation and higher default rates compared with their public and private peers.

The most recent scandal: Argosy University withheld financial aid. Students couldn't pay their bills.

The aftermath: 'Unfair is an understatement': Students struggle after college chain abruptly closes

That said, free public college alone wouldn't hurt for-profits because they offer different skill sets, Gunderson said. The students for-profits attract aren't necessarily looking for the liberal arts experience, he said. 

But free public college might push more students away from small, private universities to what would be a cheaper alternative, said Richard Ekman, president of the Council of Independent Colleges. Other students, he said, might choose a private college anyway because they saw it as a higher-quality education.

It’s a question of taxpayer value, he said. Private colleges take federal grant money, but much of their costs are subsidized by private donors.

“Free college is nice,” Ekman said. “It’s obviously appealing, but is it the most responsible way to go about it? I am not so sure.”  

The ideas of debt forgiveness and free college are well-intentioned but ultimately counterproductive, said Michael Crow, president of Arizona State University. Rather than forgiving loans, the government should work toward making sure students graduate. Debt is less ominous with a degree, he said.

And, sure, give students more grant money. But if the federal government starts covering tuition costs directly, colleges won't be colleges anymore. “I don’t know what they would be,” he said. “They would be government schools, tightly regulated by bureaucrats. That’s not the path to success.”

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A boon for rich doctors?

The need for debt forgiveness rests on the premise there’s a student loan crisis.

Some people certainly struggle to pay back their loans. Roughly one in 10 borrowers are in default – generally, when people haven’t made a payment on their loans in about nine months. The percentage is higher for African American borrowers.  

Plenty of people, however, are paying back their loans just fine. Loan forgiveness gives a huge advantage to these people, said Colleen Campbell, who studies student loans at the Center for American Progress, a left-leaning think tank.

People with higher debts often have higher earnings, especially people who went to graduate school such as lawyers or doctors. They’re more able to pay off their loans – and loan forgiveness would make them very wealthy very quickly.

That's drawn opposition to Warren's plan from some liberals. The left-leaning Brookings Institution issued an analysis Wednesday that said richer Americans would benefit disproportionately from the plan compared with their poorer counterparts. 

Ironically, the ones who struggle most are people with smaller loan amounts who never finished college, Campbell said. They don’t have the extra earning power that can come as a result of a degree.

The question, she said, becomes: Why give more money to someone who is thriving, instead of redirecting that money to other services that would help lower-income students get through college?

And why forgive such large debts? Warren’s proposed amount of up to $50,000 in forgiveness is well above what the average American owes. The Institute for College Access & Success, a nonprofit group that tracks debt, found the average borrower in the class of 2017 owed about $28,500.

Lowering the offer for debt forgiveness to, say, $20,000 would make a significant dent in the debt for many, Campbell said, while wiping the slate clean for those with smaller debt amounts who didn’t finish their college education.


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