Elizabeth Warren’s Plan to Forgive Student Debt Is Smart Politics and Decent Policy. Will Anyone Care?

Elizabeth Warren holds two boxes from Dunkin' Donuts amid a crowd of strikers.
The doughnuts are a metaphor. (Elizabeth Warren shakes hands and greets striking Stop & Shop workers while also bringing coffee and baked goods on April 12 in Somerville, Massachusetts.) Scott Eisen/Getty Images

Elizabeth Warren’s presidential campaign appears to be premised on two main strategic assumptions.

The first is that Democrats actually care about public policy chops. These past few months have seen the senator from Massachusetts transform into the hardest working wonk in politics, cranking out one meaty proposal after another on everything from child care to antitrust to exotic forms of corporate taxation, with the hope that it might help her stand out in the increasingly crowded field.

The second is that with the right amount of hard work, Warren can eventually peel enough dedicated left-wing voters from Sen. Bernie Sanders to mount a viable candidacy. If not, she’s basically stuck angling for a vice presidential nod.

Warren’s latest big idea seems like it’s built to test both of those beliefs. On Monday, she became the first major 2020 contender to back mass student loan forgiveness, unveiling a plan that would cancel the majority of borrowers’ outstanding debts while overhauling the U.S. higher education system in order to make public colleges tuition free.

Under Warren’s plan, the government would wipe up to $50,000 in debt for individuals living in households that make less than $100,000 per year. Higher earners would receive less. But according to an analysis the candidate commissioned from Brandeis researchers, the program would write off at least some debt for 95 percent of borrowers, and three-quarters would have their entire balance cleared.

The vision is big. It’s bold. It’s more carefully thought out than versions of the idea that have been floating around activist circles for years. And it’s hard to imagine a proposal more squarely aimed at the hearts and wallets of young Democrats who currently support America’s gruff socialist grandfather. Whether it gains traction might tell us a lot about Warren’s potential in the race.

It’s important to be clear: Warren’s proposal is better than your typical student debt forgiveness schemes, which have been generally and fairly criticized for being regressive.

Canceling out student debt through loan forgiveness has been a favorite policy idea on the left ever since Occupy Wall Street helped popularize it almost a decade ago. Usually, the notion is that Washington should wave away all of the debt in one fell swoop. The upside to this approach is that it’s simple, catchy, and makes a certain philosophical sense if you think making anybody borrow for school is immoral.

But there are also a some obvious downsides. First, it would be expensive: Americans currently have about $1.5 trillion of outstanding education loans, which is close to Trump-tax-cut money. More importantly, as previously noted, it would be pretty economically regressive. People who attend college tend to earn more than those who don’t. And while the folks who have the most difficulty paying back what they owe, such as former students at scammy for-profit schools, tend to have relatively low balances, the biggest borrowers—the ones racking up those fabled six-figure tabs—are usually graduate and professional degree students who go on to earn good money as doctors, lawyers, and engineers. (Fun, little-known fact: 39 percent of all new student loan dollars are borrowed for grad school.) As a result, 49 percent of all outstanding student loan balances belong to the highest earning 25 percent of U.S. households. Hence why the New York Times’ David Leonhardt once wrote that “student debt cancellation would be a giant welfare program for the bourgeoisie.”

Finally, some people just find the concept of student debt forgiveness inherently offensive, either because they already paid their loans and think others should too—people tend to get moralistic about debt—or because they didn’t go to college and don’t understand why people who did deserve special help.

Warren’s plan is designed to address a lot of these concerns. First, it tapers forgiveness for higher earners. (Under its formula, someone with a household income of $140,000 could get up to $40,000 written off their debt; at $200,000 in income, they could get up to $17,000 written off; at $250,000, they’d get nothing.) And because it caps forgiveness at $50,000, it won’t hand giant windfalls to lawyers and doctors by forgiving their entire law or medical school debt. The upshot is that it’s both less expensive and less regressive than universal forgiveness—Warren’s campaign estimates that the total cost would be $650 billion. It’s the best, basic blueprint a politician has produced for how to design debt forgiveness without making it a straight giveaway to the upper middle class.1

That said, the proposal would still benefit a good number of young professionals who aren’t strictly desperate for government help. A medical resident or a Google coder could qualify for tens of thousands of dollars in debt forgiveness, even though they eventually stand to rake in six-figure salaries for most of their adult lives. We are, in the end, talking about a policy idea that would essentially write off up to $50,000 of Stanford debt for a single tech bro in San Fran making $100,000.

While that might turn off some people, here’s why Warren’s plan will probably help her in the Democratic primary.

Whether you find that central moral quandary offensive will probably depend on whether you buy Warren’s bigger political pitch on this issue. The senator isn’t simply proposing debt forgiveness on its own, after all. Instead, she’s packaging it together with free college and a number of other reforms—the plan would make student loans dischargeable in bankruptcy, expand the Pell grant program to cover more living expenses, fix the troubled Public Service Loan Forgiveness Program—into a single, grand reset for American higher education. Her basic message is that our entire system of financing college for the past 30 or so years has been a mistake, one that has led to higher tuition costs and saddled millennials with debt that’s left them poorer, measured by wealth, than previous generations, while possibly hurting the broader economy by lowering homeownership. The idea is that we need to clear the slate and start over, while “making sure nothing like this ever happens again,” as she put it in a blog post. In other words, she’s pitching a collegiate new deal.

This argument is a pretty natural fit for Warren, who spent a lot of her early time in the Senate focused on student debt (the first bill she ever introduced would have let students refinance at lower rates). And recent polling suggests it will go over well among the Democratic primary electorate. The issue is of course near and dear to the hearts of overeducated, underpaid progressive activists. But as I’ve written before, the appeal seems to be much broader. According to a survey by Data for Progress, 66 percent of the party’s voters support the concept of canceling all student debt, while just 13 percent oppose it. Warren’s proposal seems likely to please a lot of her potential supporters without alienating too many. It’s not clear yet student debt forgiveness is the sort of marquee policy issue that can draw young supporters from Sanders. But the early reaction to it, including the revulsion from conservatives, suggests it’s breaking through better than, say, Warren’s pitch on public lands.

The general election could be a different story. Among all voters, forgiving student debt is a much more polarizing idea: According to Data for Progress, as many strongly oppose it as strongly support it. If she ends up running against Trump, Warren will have to sell voters on her broader vision for a new deal on education, rather than just her narrower debt plans.

Opinions of Democrats and Republicans on taking back Trump's tax breaks to fund student debt forgiveness.
Data from Data for Progress. Chart by Jordan Weissmann.

But first, she still needs to clear the primary. By becoming the first candidate to embrace an idea that has long been near and dear to the hearts of left-wing activists yet has never really broken into the mainstream, it’s possible Warren could finally start to climb up the field after months of campaign stasis. Or maybe nobody cares about policy. We’ll see.

1Full disclosure: It’s also pretty similar to some ideas I’ve previously outlined. That said, I have absolutely no idea if there are any Slate readers on the Warren campaign. And if you want to get really in the weeds, there are some design elements of the proposal that I don’t love, that it offers forgiveness to individuals based on their household income. I’m also not sure $50,000 is really the right amount here. But that sort of minutia is probably best left for Twitter.