This is only my opinion and not the representation of Saintel Daily, LLC.
Right now, America seems to be divided between Democrats and Republicans. For the most part, the Democrats have been unhappy with the way the Republicans have been running the country and are set out to change that. And in doing so, we have seen a number of Democratic hopefuls throw their hat in the ring to be the next nominee to run for the presidency. We are still in the early days of that race, but one thing is certain, these Democrats need to come forward with a solid platform if they want to have the chance to win the nomination. And that’s what we see Elizabeth Warren doing by proposing that the federal government write off hundreds of billions of dollars in existing student loan debt.
As someone who just recently paid off said debt, and did so in a big way, I am fully supportive of this. But as someone who has a semblance of just how much debt the federal government has, I am skeptical that this is a sound policy decision. But let’s talk about the proposal itself:
- The amount of debt that would be eligible for forgiveness would vary by income, but an independent expert analysis submitted as part of her plan suggests that three-quarters of households would see all their federal student loans forgiven. According to the analysis notes, getting rid of this debt would also reduce the racial wealth gap.
- The debt cancellation plan would cancel $50,000 in student loan debt for every person with a household income of $100,000 or less.
- It would also provide “substantial debt cancellation” for every person with a household income between $100,000 and $250,000
This is very interesting to me because the proposal doesn’t just suggest that people who have low income would be eligible for the debt relief, but rather, everyone who has student loan debt would be eligible. But the feasibility of it is what concerns me. To be able to achieve this goal, the federal government would have to forgo $1.25 trillion. So where will this money come from? According to Warren, it would be paid for by a new tax on multimillionaires. Or at least in part, and would also be partially offset by new economic growth.
But what if they decide not to do it? Well, federal agencies have suggested that the economy could be impacted. In fact, it has been calculated that the current $1.5 trillion of outstanding student loans could be impacting consumer spending and demand for mortgages. So if the federal government were to cancel these loans, it would free up money for people to start investing in the economy through buying a house, for example.
But can Warren win on this type of platform? I’m not sure that the answer is yes, but I also don’t think it’s no either. I think it depends on what else she’s offering. If this is her only big-ticket, platform item, then she is going to have a hard time winning the nomination. It’s also a weird way of doing it. Meaning, it’s unusual to suggest wanting to wipe out everyone’s student loans completely. Others might offer to cut back on someone’s debt repayment, or offer some kind of relief. This is also an issue for younger people, which makes you wonder how Warren will be able to appeal to middle-age or older voters? All that said, I think her heart is in the right place when it comes to the policy, but I think she might need to rethink how it is implemented.