$50K Student Loan Plan Would Wipe Out Debt for 36 Million Americans Sen. Elizabeth Warren, D-Mass., speaks during a news conference on Capitol Hill in Washington, D.C., Monday, March 1, 2021. (AP Photo/Susan Walsh)
By Eric Mack | Wednesday, 14 April 2021 12:09 PM
There are 36 million Americans who would have their federal student loans completely erased if progressives get their way on a program providing $50,000 of debt forgiveness, according to the Education Department.
That represents roughly 80% of the 45 million federal student loan holders, the data released Tuesday by Sen. Elizabeth Warren, D-Mass., shows.
"The COVID-19 crisis is worsening the massive inequities in our economy and society, but even before the pandemic the student loan debt crisis was already crushing millions of Americans," Sen. Warren said in proposing the plan right after President Joe Biden took office. "By canceling up to $50,000 in federal student loan debt for borrowers, President Biden can take the single most effective executive action available to provide a massive stimulus to our economy, help narrow the racial wealth gap, and lift this impossible burden off of tens of millions of families."
There is an estimated $1.5 trillion active in federal student loans and 10.3 million borrowers were either in default or more than 3 months behind on debt payments at the end of 2019, before the global coronavirus pandemic even hit, Politico reported.
Under the $50K giveaway proposal, 9.8 million of those in default or delinquent would be bailed out, according to the report.
"Republican and Democratic presidents have a long history of using their statutory authority to cancel student loan debt," Warren said at a hearing Tuesday. "President Obama used this authority to cancel all debt for tens of thousands of students, and President Trump used this authority to cancel some debt — accrued interest — for 37 million federal borrowers.
"Canceling $50K in student loan debt would also help close the Black/White wealth gap among borrowers by 25 points and ensure that millions of borrowers can fully participate in our economy. For Latinos, the gap would close by 27 points. This is the single most powerful executive action President Biden could take to advance racial equity and give everyone in America a chance to build a future."
Opponents of the loan forgiveness plan say it’s a mass bailout that favors an elite group of graduates with more than $25,000 in loans.
"I think getting the economy back working again is the best way of moving forward on how to deal with anyone's debt," Rep. Kevin McCarthy, R-Calif., has said regarding the issue.
"We need to stop pretending that student loan debt is actually a 'crisis.' The average monthly payment is $200-$299. If you can't pay that, as a college graduate, it's your own fault," Brad Polumbo, fellow at the libertarian Foundation for Economic Education (FEE) think tank, wrote in 2020 regarding the issue, Newsweek reported.
The Biden administration is reviewing the proposal to bail out student debtors.
"Student loan debt is weighing down millions of families in New York and across this country," Senate Majority Leader Chuck Schumer, D-N.Y., said. "During a time of historic and overlapping crises, which are disproportionately impacting communities of color, we must do everything in our power to deliver real relief to the American people, lift up our struggling economy and close the racial wealth gap.
"Democrats are committed to big, bold action, and this resolution to cancel up to $50,000 in federal student loan debt is one of the strongest steps the president can take to achieve these goals."
Biden's campaign had weighed a $10,000 forgiveness plan, which would completely wipe out debts for 15 million, including 4.6 million who were in default or delinquent at the end of 2019, according to the Education Department.
Warren's data also noted more than 10.6 million have carried federal student loan debt for more than a decade, while 4.4 million have been in repayment for more than 20 years, Politico reported.