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What Elizabeth Warren's Student Debt Plan Means For You

And how it would affect school funding for future generations of scholars

If you are one of the 44.7 million Americans living with student loan debt, there is a very good chance that Senator Elizabeth Warren wants to help you get out from under that seemingly insurmountable rock.

On Monday, April 22, the Democratic hopeful for the 2020 election unveiled a comprehensive plan that aims to reframe how higher education works in the United States. Perhaps the most immediate and buzziest portion of her proposal includes student-loan forgiveness up to $50,000 for people who live in households that make less than $100,000 a year. People who live in households that earn less than $250,000 would also benefit, but at a rate that subtracts $1 out of every $3 above $100,000 the household makes. (A person with a household income of $130,000, for example, would receive $40,000 in student-loan cancellation.) The plan does not allow for such loan cancellations for people whose household incomes exceeds $250,000. According to experts, such wide-scale loan forgiveness would immediately wipe out the debt of 75 percent of people with student loan debt; overall, 95 percent of people with loan debt would ultimately benefit.

"My broad cancellation plan is a real solution to our student debt crisis. It helps millions of families and removes a weight that’s holding back our economy," Warren argues in her Medium post. "The enormous student debt burden weighing down our economy isn’t the result of laziness or irresponsibility. It’s the result of a government that has consistently put the interests of the wealthy and well-connected over the interests of working families."

She argues that such loan forgiveness would help stimulate the economy on every level from increased rate of college completion to home ownership. As she pointed out, the proposed policy also expands on legislation she's spearheaded throughout her career, including bills for Stafford loan borrowers and those who banked on the Public Service Loan Forgiveness programs to help alleviate their debt.

Warren's plan would also aim to restructure the collegiate system altogether, by making public two-year and four-year colleges free for those who attend them; the proposal includes factors like books and housing in that process. For-profit colleges would also be banned from receiving federal monies for any reason, and the plan would set up a fund of $50 billion (at minimum) for historically Black colleges and universities (HBCUs) and minority-serving institutions (MSIs), as well as ensure that states and their public schools are putting in work to make higher education more equitable for students of color and low-income students.

As it stands right now, the people who are most often impacted by the broken system are people of color, Warren points out: "Nearly half of for-profit college undergraduate students are students of color. 95 percent of Black students attending a for-profit college took out student loans, and a staggering 75 percent of Black students who did not complete their program at a for-profit college defaulted. Many for-profit colleges have built a business model around sucking down taxpayer dollars while delivering a poor education primarily to students of color." Black students are also 20 percent more likely to need federal student loans, but even those who complete bachelor's degrees often owe more than they took out years later, due to a mix of loan size and discrimination at the job level.

So far, Warren's plan is the only one that takes race and income into account with regards to fixing the student-loan system, though some 2020 hopefuls have indicated that they would like to move toward partial or complete student-loan forgiveness, or making public schools free for those attending. Senator Kamala Harris previously teamed up with Warren to ask leaders and activists how to best address the disproportionate debt many students of color face, and has also signed on to the Debt-Free College Act which would raise federal resources for public colleges and universities, as well as proposed funding to HBCUs and MSIs to help boost the salaries of minority teachers.

All told, experts estimate that Warren's plan will cost $1.25 trillion over the course of 10 years which, yes, sounds like a completely fake amount of money until you consider where she plans to make up for that: her so-called "ultra-millionaire tax," which would target households making more than $50 million a year at a rate of two percent for every dollar above that $50 million threshold, and a total rate of three percent for households making over $1 billion a year. All told, that tax would generate a total of $2.75 trillion over the course of 10 years — and that's not even accounting for the money to be found in the "Real Corporate Profits Tax," which would apply to American companies that report more than $100 million a year in worldwide profits.