On Monday, Senator Elizabeth Warren (D-MA) proposed a government program to eliminate billions of dollars worth of student-loan debt in an effort to alleviate the burden of rising higher education costs, especially for low-to-middle income families, The Wall Street Journal reports.
The 2020 Democratic presidential candidate wants to bump taxes on the wealthy to focus primarily on helping those that are the least likely to be able to pay their loans back. Her recent proposal follows her initiative to eliminate tuition and fees at both two- and four-year public American universities by having federal and state governments negotiate to split the costs. Warren also wants to increase funding for Pell Grants, or stipends for college expenses that don't have to be paid back like loans, by an average of $10 billion per year over the next 10 years.
Warren outlines specifically in her proposal that she would create a federal fund of $50 billion at the minimum for historically black colleges and universities (HBCUs) as well as for other institutions for minorities. According to a WSJ article from last week, HBCUs, once a path to financial prosperity for black Americans, has recently been producing graduates who struggle disproportionately with debt.
Warren's proposals would cost $1.25 trillion over a decade—over $600 billion of which would go to the federal government paying off existing student loans. To finance it all, she suggests an "ultra-millionaire tax"—a two percent tax on those worth over $5 million and an additional one percent on those worth over $1 billion. Experts at Brandeis University reviewed Warren's plan and helped estimate the costs. The professors said that "the economic growth generated by this proposal will create additional tax revenue that reduces the overall cost.”