You may have heard about Elizabeth Warren's student-debt cancellation plan, but did you know its origins?
For many Americans, the idea of large-scale student-debt cancellation likely came to their attention for the first time this week, when Sen. Elizabeth Warren, a Massachusetts Democrat, announced as part of her campaign for president a plan to wipe out millions of Americans’ student loans.
Warren’s plan — to cancel $50,000 of student debt for borrowers earning $100,000 or less, up to $50,000 on a sliding scale for those earning between $100,000 and $250,000 and no debt for those earning $250,000 or more — looks very different from what Larson and other activists proposed. The Corinthian strike brought attention to a 1990s-era law called defense to repayment, which allows borrowers to have their federal student loans forgiven if their schools engaged in fraud. They then applied the same tactic to a specific kind of student debt — nearly $4 million in loans that students who attended the now-closed Everest College, a subsidiary of the for-profit chain Corinthian Colleges, owed to the school.
Broadening the idea to all borrowers Though that debt cancellation campaign was focused on a relatively narrow group of borrowers, watching the process unfold helped open up the conversation around broader debt forgiveness, said Julie Margetta Morgan, a fellow at the Roosevelt Institute, a progressive think tank.
Some plans allow borrowers to repay their debt as a percentage of their income and then have the balance wiped away after at least a decade of payments for public servants and at least 20 years for other borrowers. . Wiping away student debt would free up money borrowers were throwing at their student loans to spend on houses, cars and other major purchases. In addition, a 2018 year paper co-authored by Margetta Morgan made the case that even student-loan borrowers who appeared to be doing “just fine” — in other words, they weren’t delinquent or in default on their debt — were actually struggling to get ahead, thanks in part to their loans. And their challenges were hurting the economy.
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