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Elizabeth Warren: The Cost of College, Student Loan Forgiveness, and Race Inequality

Elizabeth Warren lied about her ancestry to get a high paying job at a very prestigious university. Elizabeth Warren was paid $429,981 as a Harvard law professor from 2010 to 2011 and got nearly $134,000 in consulting fees on legal cases in 2010. Now, she vows to make college affordable for everyone.

U.S. Senator Warren (D-MA), will introduce legislation to cancel student loan debt for 42 million Americans. The ambitious student loan forgiveness plan would cancel student loan debt for more than 95% of borrowers, and would entirely cancel student loan debt for more than 75% of Americans with student loan debt. Warren believes that her plan would reduce the wealth gap in America and provide an economic stimulus to the middle class to increase home purchases and help start small businesses.

“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?”
According to the latest student loan debt statistics, there are more than 44 million Americans who collectively owe $1.5 trillion in student loan debt. Today, according to personal finance site Make Lemonade, student loan debt is now the second highest consumer debt category – second only to mortgages and higher than credit card debt and auto loans. By 2023, 40% of student loan borrowers may default on their student loans.

-Forbes

Student loan forgiveness for that many Americans is a very costly proposal. $1.5 trillion is roughly half the entire Federal budget for the fiscal year of 2015. Does her plan include salary decreases for professors? Tuition decreases across the board? Decreased costs for room and board for students while in attendance? Here’s what she proposes:

  • $50,000 of student debt forgiveness for federal and private student loans
  • Borrowers with household income below $100,000 would receive $50,000 in tax-free forgiveness. If you make more than $100,000 as a household, your forgiveness credit would decline by $1 for each $3 of income above the $100,000 income level.  Above $250,000 of household income, you’d receive no forgiveness. For example, a $160,000 income gets you $30,000 of forgiveness, $220,000 of income gets you $10,000 of forgiveness and $260,000 would get you $0.
  • To go along with this short-term stimulus, Warren would pass The Universal Free College program. This would eliminate tuition and fees at every public two- and four-year college in America.

With this plan, a family could simply save up a bit of money, pay rent for a year, quit their jobs, and be forgiven the student loans they have accrued. Afterwords, debt-free, they can go back to their old jobs, or just get a new one that pays even more. Or better yet, they could then head off to another 4 year college FOR FREE and get a Master’s degree, Doctorate even.

Who’s going to pay these teachers’ 400K+ per year salaries?

Warren has pitched the debt cancellation plan as a way to tackle the racial wealth gap, noting that borrowers of color are disproportionately burdened by student loan debt.

-politico

Average Student Loan Debt by Gender and Race
Student loan debt balances for African-American women take up 111% of their first-year income.
Women, in general, have to use a higher percentage of their income to pay student loan debt than men.
Asian men have the lowest percentage of student loan debt, with their college debt only taking up 65% of their first-year income.
To further our analysis, we took a look at how much student loan debt payments are eating into borrowers’ paychecks after college. This is calculated by taking a person’s total student loan debt and dividing that value by their annual income one year post-graduation. On average, student debt balances of African-Americans take up the largest percentage of their first-year income, while Asian-Americans have the lowest percentage.

One could argue the race/ gender discrepency is attributed to the average career choices made by each race. Asians are without a doubt the seemingly most advantaged.

One could talk about inequality all day, but when it comes to skilled labor forces, a degree in Engineering will probably out-pay a degree in Women’s Studies, or English Literature. Hard work pays off.

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