Column: Elizabeth Warren's student debt forgiveness plan is being attacked because it mostly helps the middle class, but what's wrong with that, hiltzikm asks.
Any broad-based proposal to forgive student loans is going to run into a few built-in problems. One is that it’s inevitably going to favor groups with the most debt, which means people with law, business and medical degrees, who also have the most potential for earning incomes allowing them to repay their loans with relatively minimal pain. High-income families accumulate disproportionately higher loan balances, so they’re going to receive disproportionately larger breaks.
plan would “provide at least some debt cancellation for 95% of people with student loan debt .” She says it also would provide “targeted cancellation for the families that need it most, substantially increase Black and Latinx wealth, and help close the racial wealth gap.” The question is how much debt cancellation is needed by 95% of all borrowers, or even 75%. Brookings’ Adam Looney calculates that the top 20% of households would receive 27% of Warren’s largesse while the bottom 60% receive only 34%. “Borrowers with advanced degrees represent 27% of borrowers, but would claim 37% of the annual benefit,” he says.
Warren also proposes a fund of at least $50 billion for historically black colleges and universities and minority-serving institutions. These institutions’ tradition of making higher education available for historically overlooked groups has been hampered by chronic financial problems.
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