Democrats Introduce Bill to Cancel Student Debt
|thenorthstar||Jun 21, 2019|
Senator Elizabeth Warren (D-Mass.) and Representative James Clyburn (D-S.C.) plan to introduce legislation that would wipe out student loan debt for millions of Americans. The legislation mirrors a plan released in April by Warren, who is running for the Democratic presidential nomination.
The bicameral legislation would eliminate up to $50,000 in student loan debt for 42 million Americans. This would translate to debt relief for 95 percent of student borrowers, including cancelling student debt altogether for 75 percent of borrowers. People earning less than $100,000 would be eligible to have $50,000 of their student debt eliminated. The Democratic legislators’ bill would also provide significant student debt relief for people with household incomes between $100,000 and $250,000, according to Forbes. The plan would not tax student loan debt that has been cancelled as income.Those earning more than $250,000 would not be eligible for debt forgiveness.Warren said that legislation could help close the wealth gap for Black and Latinx people. The legislation could result in Black families seeing their wealth grow about $15,700, while Latinx families would see a wealth growth of more than $27,000.
“The student debt crisis is real and it’s crushing millions of people — especially people of color,” Warren said in a statement. “It’s time to decide: Are we going to be a country that only helps the rich and powerful get richer and more powerful, or are we going to be a country that invests in its future?”
Student loan debt reached $1.47 trillion at the end of 2018, according to a report by the Federal Reserve Bank of New York cited by NBC News. An estimated 44.7 million Americans have student loan debt, with more than three out of four borrowers owing less than $50,000.
The 2018 report by the Federal Reserve Bank found that the typical monthly payment for borrowers paying off their student loan debt is between $200 and $300 a month. In 2017, 20 percent of student borrowers were behind on their payments.Student loan debt is now the second highest consumer debt category, behind mortgages and ahead of credit card debt and auto loans, according to personal finance site Make Lemonade. An estimated 40 percent of student loan borrowers could default on their loans by 2023, Forbes reported.
“For far too many students and families, the cost of higher education has meant daunting debt and a lifetime of student loan repayments,” Clyburn said in a statement. “We need to allow people to get the kind of post-secondary education that will help them achieve their dreams and aspirations, and earn a living to become productive members of society.”Clyburn said he looked forward to working with Warren on the legislation, which aims to provide affordable access to education “and attempts to make amends for the underinvestment made in higher education at the state and federal level for over two decades.”
Warren and Clyburn’s legislation announcement did not reveal how their proposal would be funded. However, Warren released a similar campaign proposal in April, which included an Ultra-Millionaire Tax. The plan would be funded by levying a 2 percent annual tax on families with at least $50 million in net worth and an additional 1 percent on wealth surpassing $1 billion.A May 2019 poll by Politico and Morning Consult found that 56 percent of registered voters would support a plan to eliminate student loan debt. The proposal was particularly popular among women, Millennials and Generation X, and people with college degrees. Voters across all ethnicities supported the measure, with 62 percent of African Americans, 55 percent of white people, and 52 percent of Hispanics supportive a student debt loan elimination.
Fellow Democratic presidential candidate Sen. Bernie Sanders also hinted he would release a plan to forgive student loan debt, CNBC reported. Sanders previously proposed tuition-free college.
About the Author
Nicole Rojas is a breaking news writer for The North Star. She has published in various venues, including Newsweek, GlobalPost, IHS Jane’s Defence Weekly, and the Long Island Post. Nicole graduated from Boston University in 2012 with a degree in print journalism. She is an avid world traveler who recently explored Asia and Australia.